Best’s News & Research Service - December 04, 2024 02:03 PM (EST)
AM Best Affirms Credit Ratings of Caribbean Alliance Insurance Company Limited
- December 04, 2024 02:03 PM (EST)
//BestWire// - AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) of Caribbean Alliance Insurance Company Limited (CAIC) (Antigua and Barbuda). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect CAIC’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
CAIC has the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). BCAR also remains strongest on a catastrophe-stressed basis, which indicates that some level of stability should be maintained through potential tail-risk events. Capitalization has been supported by consistent earnings generation as a result of the company’s prudent underwriting standards. Like many of its Caribbean peers, CAIC has an elevated level of reinsurance dependence. The reinsurance program is used to protect surplus and earnings from severe catastrophe events. Partially offsetting the high reinsurance dependence is the use of high credit quality reinsurance counterparties. CAIC’s balance sheet strength is enhanced by a highly liquid, conservative invested asset portfolio that is predominantly composed of cash and short-term investments.
CAIC’s operating performance is consistently favorable and accretive to capital and surplus. Historically, operating gains have been driven by strong underwriting results and supplemented by commission and investment income. Despite a modest uptick in the loss and expense ratios in 2023, CAIC still reported very strong earnings that were driven by material profit commissions. Strong operating results have continued through 2024. Due to the conservative nature of its invested assets, investment performance has generally trailed peers; however, the higher interest rate environment has led to a positive trend in investment income in recent years. Gross premiums have increased in each of the past five years, led by growth in its property book. On a net basis, though, premiums have remained relatively flat.
The neutral business profile assessment reflects CAIC’s strong market presence throughout the Eastern Caribbean. CAIC operates in 16 competitive territories, primarily in the Eastern Caribbean, and maintains a material market share in nearly all territories. While premiums are well-diversified geographically, there is exposure to product concentration risk as property and motor business comprise the majority of insurance revenue. CAIC also maintains a formal enterprise risk management program to appropriately identify, mitigate and monitor its risk exposures.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.