Independent insurance
rater AM Best affirmed a financial strength rating of A-(Excellent) for Cayman
First Insurance Company Limited and removed the company from under review with
negative implications last week.
AM Best also did the
same for Cayman First’s parent company, Bahamas First General Insurance Company
Limited. AM Best also affirmed issuer credit ratings of A- for both companies.
Bahamas First was given an outlook of “stable” to the ratings, while Cayman first
was given a negative outlook to its rating.
Cayman First Senior Vice
President Michael Gayle said the negative outlook for the rating wasn’t a
surprise.
“This is driven largely
by the need for us to continue to improve the profitability of our health
business, a process which has started in earnest under our new ownership,” he
said. “In addition, there is a desire to evaluate the outcome of some
outstanding litigation matters. We are confident that both of these will be
resolved satisfactorily and the negative outlook for Cayman First will be
removed.”
Cayman First has been
embroiled in litigation over the Hurricane Ivan claim at Windsor Village since
2006, when the company was known as Cayman General Insurance Company. A
judgment in that litigation is expected soon.
The insurer was later
called Sagicor General Insurance Company. Bahamas First bought out Sagicor in
March and changed the name to Cayman First in August. The Cayman Islands
Government still owns 24 per cent of the company, a stake it acquired as part
of a negotiated settlement of its Hurricane Ivan claim with Cayman General in
2005. AM Best stated in a press release that its rating for Cayman First
recognised “its solid capitalisation and positive non-health operating results,
along with its expertise in the Cayman market”.
The insurance rater also
commented on Cayman First’s health business. “The negative outlook on [Cayman
First] acknowledges the drag on its operating results due to the significant
losses emanating from the company’s accident and health lines of business,” it
stated. “[Bahamas First] management has developed and implemented strategies to
reduce these losses and their effect on earnings.”
In rating Bahamas First,
AM Best noted its excellent capitalisation, favourable operating performance
and established presence in the Bahamian market. “These factors are supported by the company’s
conservative catastrophe program, underwriting controls, local market expertise
and solid risk management programs,” the press release stated. “These positive
rating factors are offset by [Bahamas First’s] geographic concentration and
catastrophe exposure, particularly to hurricanes in the Caribbean.”
Mr. Gayle said the
ratings were “a demonstration of the Group’s commitment to maintain the A- (Excellent)
rating for all of its operating entities”.
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