AM Best has affirmed the financial strength rating of A- (Excellent) and issuer credit rating of “a-” of Cayman First Insurance Company Limited, recognising Cayman First’s improved capitalisation and positive non-health operating results along with its expertise in the Cayman market, the rating agency reported.
The outlook for the ratings is negative based on a drag on Cayman First’s operating results due to losses emanating from the company’s accident and health lines of business. However, Cayman First’s parent company, Bahamas First Holdings, developed and implemented strategies to reduce these losses and their impact on earnings, AM Best said. The rating agency will continue to monitor and assess the effectiveness of these strategies and Cayman First’s integration into Bahamas First Holding’s existing operations.
The credit rating could be revised upward if operating profits in Cayman First’s health and accident book of business improved and surplus appreciated organically, according to AM Best. Negative triggers for the insurer’s rating could include equity erosion, increased operating leverage from its current levels as well as a decline in operating performance.
At the same time the rating agency affirmed the financial strength rating of A- (Excellent) and issuer credit rating of “a-” of Bahamas First General Insurance Company Limited, another Bahamas First Holding subsidiary, with a stable outlook.
As the primary holding and major source of earnings for BFH, the ratings of BFG reflect its continued excellent capitalisation, favourable operating performance and leading market share in the Bahamian market, AM Best noted.
These factors are supported by BFG’s conservative catastrophe programme, underwriting controls, local market expertise and solid risk management programmes. These positive rating factors are offset by Bahamas First General’s geographic concentration and catastrophe exposure, particularly to hurricanes in the Caribbean.
While the rating outlook for BFG is stable, positive rating actions could occur if the company exhibits sustainable long term improvements in operating performance coupled with improvements in the Bahamas macroeconomic environment. Negative rating triggers could include protracted adverse operating results that are exacerbated by a large catastrophic event.