Sagicor rating outlook upgraded after rights issue
Published:Friday | July 29, 2011 | 12:00 AM
Insurance rating agency AM Best Company has upgraded Sagicor Financial Corporation's (SFC) credit rating from negative to stable while affirming the financial strength rating of some subsidiaries as excellent.
Local subsidiary Sagicor Life Jamaica Limited's rating was reaffirmed as rated B++, an indication of good financial strength, and 'bbb' on its issuer credit with a stable outlook.
SFC is a publicly traded company on the Barbados, Trinidad and London stock exchanges. It is among the largest property and casualty insurers in Barbados with a significant presence in Trinidad and Tobago, Dominica, St Lucia, and Antigua.
Sagicor Financial's issuer credit rating was affirmed at 'bbb-' and its debt rating at 'bbb' on US$150 million 7.5 per cent senior unsecured notes due to mature in 2016.
Subsidiaries Sagicor Life Inc and Sagicor General Insurance Inc in Barbados, Sagicor Capital Life Insurance Company Limited of the Bahamas, and Sagicor Life USA in Texas were all reaffirmed as A- performers.
AM Best attributes the revised outlook on SFC to a satisfactory capitalisation, consistent earnings in its life insurance segments, and an overall relative improvement in the Jamaican economy, where it continues to have significant business and financial exposure through its controlling interest in Sagicor Life Jamaica.
While the insurance ratings agency believes that the risk of the Jamaican exposure remains high, the rating agency said it is mitigated somewhat by the Government's recent debt-exchange programme in 2010 and the overall favourable performance of Sagicor Jamaica.
Additionally, AM Best said that the company's recent rights issue of common and preference shares, which raised some US$140 million, positions SFC to fund its regional growth strategy.
"Given its diversified geographical reach in the Caribbean region, the group remains a formidable regional player in its life and property/casualty operations," said AM Best in a statement released on Tuesday.
"On a risk-adjusted basis, the group's capitalisation remains more than adequate, including the business risk exposure in its Jamaican operations."
But AM Best contends that there are still negative factors that may pose challenges to the Barbados insurance group.
"Offsetting factors include the weak economic environment in the Caribbean region and the negative impact of natural catastrophe losses globally, which may pose challenges for the group," the ratings agency said
"The increase in year-over-year revenue growth and net income, excluding losses in its Lloyds operation, has been modest and reflects the challenge of top-line growth due to the mature nature of the life insurance market in the Caribbean.