AM Best Information Services

FEBRUARY 03, 2017 09:10 AM (EST)

A.M. Best Upgrades Credit Ratings of Sagicor Life Jamaica Ltd; Affirms Credit Ratings of Sagicor Financial Corp.

 Steve Vincent
Senior Financial Analyst – L/H
+1 908 439 2200, ext. 5802

Alexander Sarfo
Senior Financial Analyst – P/C
+1 908 439 2200, ext. 5779

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644


OLDWICK - FEBRUARY 03, 2017 09:10 AM (EST)
A.M. Best has upgraded the Financial Strength Rating (FSR) to B++ (Good) from B+ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “bbb” from “bbb-“ of Sagicor Life Jamaica Limited (SLJ) (Kingston, Jamaica). Concurrently, A.M. Best has affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” of Sagicor Life Inc. (St. Michael, Barbados). A.M. Best also has affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” of Sagicor General Insurance Inc. (Sagicor General) (Bridgetown, Barbados) and Sagicor Life Insurance Company (Sagicor Life USA) (Austin, TX).

In addition, A.M. Best has affirmed the Long-Term ICR of “bbb-” of the ultimate parent, Sagicor Financial Corporation Limited (SFC) (Bermuda) and the Long-Term Issue Credit Rating of “bbb+” on the USD 320 million, 8.875% senior unsecured notes that mature in 2022, noting Sagicor Life Inc.’s guarantee. The outlook of these Credit Ratings (ratings) is stable.

The rating upgrades of SLJ reflect the organization’s strong brand recognition, favorable market position, strong earnings in its core business lines and adequate risk-adjusted capital position. A.M. Best, however, does recognize its business risk exposures in Jamaica.

SFC is publicly traded on the Barbados, Trinidad and London stock exchanges. SFC’s overall leverage position remains within A.M. Best’s expectations for its current rating level. In addition, diversified sources of cash and profitable operations provide adequate debt service coverage.

The ratings reflect the organization’s adequate capitalization, consistent earnings in its core business lines and strong brand recognition in the Caribbean market. Through its operating subsidiaries, SFC has a long operating history, very strong brand recognition and diversified geographical reach, all of which contribute to a favorable competitive market position throughout the Caribbean region. Supported by profitable operations, SFC’s consolidated risk-adjusted capital position remains adequate, including its business risk exposures in its Jamaica operations.

Offsetting rating factors include SFC’s significant business and financial exposure to Jamaica’s economy through its controlling interest in Sagicor Group Jamaica (a recently created holding company of SLJ) and emerging country risks in Barbados. While A.M. Best believes such exposures are partially mitigated by the sustained favorable performance of SFC’s Jamaica operations, the somewhat stabilized financial condition in Jamaica and geographic diversification in the Caribbean region, further deterioration in Jamaica’s or Barbados’ financial condition potentially could stress SFC’s overall operating results. Additionally, SFC may face challenges to significantly increase its earnings and premium growth given the headwinds to economic growth in the Caribbean region.

Sagicor Life USA’s earnings are highly sensitive to annuity growth and relies on reinsurance to manage growth. The company continues to enjoy parental support, mainly in the form of surplus notes, to maintain an adequate level of risk-adjusted capital in light of expansion expenses and the low interest rate environment. A.M. Best expects such support to continue as the U.S. market is viewed as an important source of future growth.

The ratings of Sagicor General are based upon its supportive balance sheet strength, excellent operating performance and strong market profile in Barbados as one of the top property and auto writers in that country. The company also has a significant presence in Trinidad and Tobago and operates in other Caribbean territories. The ratings also are reflective of the company’s strategic role within SFC, the synergies derived as a subsidiary of SFC and brand name recognition. 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, despite challenging market conditions and a higher expense ratio in recent years that has impacted underwriting results. These positive rating factors are partially offset by difficult local macroeconomic conditions and the increasingly competitive regional insurance environment throughout the Caribbean. In addition, the company has significant exposure in the region to loss from catastrophic weather events, which is materially mitigated by a comprehensive reinsurance program backed by quality reinsurers.

This press release relates to Credit Ratings that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.

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