The international insurance rating company A.M. Best announced yesterday it has affirmed the financial strength rating of A- (Excellent) of Cayman’s Island Heritage Insurance Company.
Best also removed the rating from under review and assigned it a stable outlook.
‘We’re very happy,’ said Island Heritage’s CEO Bryan Murphy, ‘It’s a big boost for us all.’
Island Heritage, along with Cayman General and British Caymanian Insurance, all had their ratings put under review by Best only days after Hurricane Ivan struck, due to ‘the uncertainty surrounding the ultimate net (loss) exposure from Hurricane Ivan and its impact on the capitalization of each company.”
Cayman General subsequently had its rating downgraded to B- (Fair) before it withdrew from the rating process at its own request. British Caymanian’s rating remains under review.
Mr. Murphy said that Island Heritage kept Best informed with all the information it had requested.
One of the key issues for Best was how Island Heritage would recapitalize. Under the company’s recapitalization plan, it will raise $8 million through a rights offering to existing shareholders.
A.M. Best noted in its press release concerning the rating affirmation that major shareholders representing 89 per cent of the company’s ownership had agreed to participate in the offering. Some of those major shareholders have even said they would be willing to increase their share allotments if minority shareholders do not fully participate.
The capital transaction is expected to be completed within the next two to three weeks, Best said, adding, ‘Island Heritage’s recapitalization plan meets A.M. Best’s capital strengthening expectations, and it fully supports the current financial strength rating.’
Mr. Murphy said the company has three institutional shareholders and a small group of individual shareholders, so it was easy to communicate with them all concerning the offering.
‘We’re all very optimistic about the future,’ said Mr. Murphy, noting that Ivan has also brought opportunities to local insurers.
‘You spend several months just dealing with the process of settling claims, and somewhere along the line you have to stick your head out and survey the opportunities.’
Mr. Murphy said Hurricane Ivan forced Island Heritage to postpone several expansion projects, but that it would now be able to resume those efforts.
‘For one thing, we’re looking at pursuing licences in several other countries,’ he said, indicating that Jamaica was on of those countries.
Cayman Islands Monetary Authority managing director Cindy Scotland was pleased with Tuesday’s development.
“The Authority congratulates Island Heritage on the re-instatement of its rating from A.M. Best, which contributes to renewed confidence in the company, and demonstrates its ability to continue to write business despite their losses incurred from Hurricane Ivan,” she said.