Business
Friday, August 16, 2013INSURANCE ratings agency AM Best removed Sagicor’s affiliates from “under review with negative implications” and affirmed their financial strength and issuer credit ratings.Sagicor Life Insurance in the US as well as Sagicor General Insurance, Sagicor Life Inc and Sagicor Capital Life Insurance in Barbados were all affirmed as excellent, while Sagicor Life Jamaica was affirmed as having good ratings.All, except for the US operations, received a stable outlook for the ratings. The Texas-based operations’ ratings were assigned a negative outlook.“Concurrently, AM Best has removed from under review with negative implications and affirmed the ICR of “bbb-” and the debt rating of “bbb” on US$150 million, 7.5 per cent senior unsecured notes, due 2016 of the ultimate parent, Sagicor Financial Corporation,” said a press statement issued by the ratings agency on Wednesday. “The outlook assigned to these ratings is stable.”AM Best said that the rating affirmations reflect the organisation’s continued satisfactory capitalisation, consistent earnings in its life insurance segments and favourable operating results.The ratings were placed under review following the National Debt Exchange (NDX) in Jamaica, which was the second debt exchange in three years.“Although SFC continues to have significant business and financial exposure to the Jamaican economy through its controlling interest in SLJ, AM Best believes the exposure is somewhat mitigated by the sustained favourable performance of SFC’s Jamaican operations and the somewhat stabilised financial condition in Jamaica,” said the release. “Supported by profitable operations, SFC’s risk-adjusted capitalisation remains adequate, including its business risk exposures in its Jamaican operations.”The negative outlook for Sagicor Life USA is due to consistent statutory operating losses on both the life and annuity lines of business, although the losses have been consistently declining as the new business stabilises. AM Best was also concerned about the lack of diversification of the company’s business profile.“While the company maintains an adequate level of risk-adjusted capital, this is the result of parental support rather than organic growth,” said AM Best. “Moreover, AM Best notes that its capital structure contains a large portion of surplus notes to its parent.”The ratings agency said that 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 could lead to a negative rating action on Sagicor.
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AM Best removes ratings of Sagicor companies from under review
