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FOR IMMEDIATE RELEASE
OLDWICK - FEBRUARY 13, 2014 02:20 PM (EST)
A.M. Best has revised the outlook to stable from negative and affirmed the financial strength rating (FSR) of A- (Excellent) and issuer credit rating (ICR) of "a-" of Best Meridian Insurance Company (BMIC) (Miami, FL). Concurrently, A.M. Best has affirmed the FSR of B++ (Good) and ICR of "bbb+" of Best Meridian International Insurance Company SPC (BMIIC) (Cayman Islands). The outlook for these ratings is stable.
The revised outlook reflects BMIC's continued favorable risk-adjusted capitalization while maintaining profitable operations and acceptable performance of its mortgage loans. Additionally, the ratings of BMIC continue to reflect its well established marketing presence and cultural knowledge of Latin American countries.
The recent increase in its exposure to commercial mortgage loans with a concentration in Florida has stabilized, and the performance remains favorable. While A.M. Best recognizes BMIC's strategy to diversify its portfolio holdings primarily away from fixed income investments to improve investment returns, mortgage loans are less liquid, and in a market downturn may underperform.
The ratings of BMIIC are based upon its consistent profitability, net premium growth, adequate level of risk-adjusted capitalization and a demonstrated commitment by the parent company, BMI Financial Group, Inc. Partially offsetting these strengths is the high level of deferred acquisition costs reflecting new business growth and the limited financial resources of the company's ultimate parent.
Positive rating movements for BMIC and BMIIC are unlikely at the present to near term as all key financial metrics are reflected in the current ratings. Rating drivers that may lead to negative rating actions include increased exposure to mortgage loans or deterioration in performance of the companies' acquired mortgage loans, a decline in operating earnings, disruption in the business model in key international markets or a significant decrease in risk-adjusted capitalization.
The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.