AM Best Information Services

AUGUST 14, 2013 12:00 AM (EDT)

A.M. Best Removes Ratings of Sagicor Financial Corporation and Its Subsidiaries From Under Review

Marisa Bernardes—L/H
Financial Analyst
(908) 439-2200, ext. 5802

Scott Mangan—P/C
Financial Analyst
(908) 439-2200, ext. 5593

Rachelle Morrow
Senior Manager, Public Relations
(908) 439-2200, ext. 5378

Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644


OLDWICK, N.J. - AUGUST 14, 2013 12:00 AM (EDT)
A.M. Best Co. has removed from under review with negative implications and affirmed the financial strength ratings (FSR) of A- (Excellent) and issuer credit ratings (ICR) of “a-” of Sagicor Life Inc. and Sagicor Capital Life Insurance Company Limited (both domiciled in St. Michael, Barbados).

A.M. Best also has removed from under review with negative implications and affirmed the FSR of A- (Excellent) and ICR of “a-” of Sagicor General Insurance Inc. (Sagicor General) (Bridgetown, Barbados) as well as the FSR of B+ (Good) and ICR of “bbb-” of Sagicor Life Jamaica Limited (SLJ) (Kingston, Jamaica). The outlook assigned to all the above ratings is stable.

Additionally, A.M. Best has removed from under review with negative implications and affirmed the FSR of A- (Excellent) and ICR of “a-” of Sagicor Life Insurance Company (Sagicor Life USA) (Austin, TX). The outlook assigned to both ratings is negative.

Concurrently, A.M. Best has removed from under review with negative implications and affirmed the ICR of “bbb-” and the debt rating of “bbb” on USD 150 million, 7.5% senior unsecured notes, due 2016 of the ultimate parent, Sagicor Financial Corporation (SFC) (Barbados). The outlook assigned to these ratings is stable. SFC is publicly traded on the Barbados, Trinidad and London Stock Exchanges.

The rating affirmations reflect the organization’s continued satisfactory capitalization, consistent earnings in its life insurance segments and favorable operating results. All ratings were placed under review following the announced debt exchange program by the Government of Jamaica, which A.M. Best notes was the second such program in three years. Although SFC continues to have significant business and financial exposure to the Jamaican economy through its controlling interest in SLJ, A.M. Best believes the exposure is somewhat mitigated by the sustained favorable performance of SFC’s Jamaican operations and the somewhat stabilized financial condition in Jamaica.

The organization’s consolidated earnings performance, excluding losses from its discontinued lines of business at its Lloyd’s operations, which are in the process of being sold, have been consistently positive. Given SFC’s diversified geographical reach and product offerings, it enjoys a strong competitive market position throughout the Caribbean region. Supported by profitable operations, SFC’s risk-adjusted capitalization remains adequate, including its business risk exposures in its Jamaican operations.

The outlook for the ratings of Sagicor Life USA is negative due to its consistent statutory operating losses on both the life and annuity lines of business; however, the losses have consistently been declining as it stabilizes its new business growth. In addition, A.M. Best would like to see a more diversified business profile. While the company maintains a adequate level of risk-adjusted capital, this is the result of parental support rather than organic growth. Moreover, A.M. Best notes that its capital structure contains a large portion of surplus notes to its parent.

Sagicor General is among the largest property/casualty insurers in Barbados and has a significant presence in Trinidad and Tobago, Dominica, St. Lucia and Antigua. Sagicor General has continued to produce positive overall operating results, which are derived from its sound underwriting performance in conjunction with a steady stream of investment income. The company also benefits from the synergies derived as a subsidiary of SFC.

The enterprise’s overall leverage position is well within A.M. Best’s expectations for its current rating level. In addition, diversified sources of cash and profitable operations provide adequate coverage to service its debt obligations.

Offsetting rating factors include the ongoing challenges SFC faces to sustain earnings and premium growth from its core mature Caribbean life/health insurance marketplace, in addition to its continued exposure in Jamaica, which could potentially stress SFC’s financial results, should market and economic conditions further deteriorate.

Key rating factors that could lead to negative rating actions include a decline in SFC’s earnings and capital, further deterioration in Jamaica (given the region’s continued elevated sovereign risk) or deterioration in the financial position of SFC.

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

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