A.M. Best affirms Island Heritage credit rating

A.M. Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings of “a” of BF&M Life Insurance Company Limited, BF&M General Insurance Company Limited and Island Heritage Insurance Company, Ltd..A.M. Best also has affirmed the Long-Term ICR of “bbb” of the parent, BF&M Limited.

The ratings of BF&M Life, BF&M General Insurance and Island Heritage reflect their good earnings, strong risk-adjusted capitalization, increased business diversification and operational efficiency, the rating agency said.

The companies have posted favorable net income for the past five years. The majority of earnings have been generated by BF&M Life’s group health line of business, which in recent years benefited from a moderated medical cost trend, achieved in part through enhanced wellness initiatives and improved pricing for overseas treatments.

The positive operating results have contributed to the strong level of capitalization at each company. The capital levels at BF&M Limited’s insurance subsidiaries remain more than adequate to support their current level of business and insurance risks, A.M. Best concluded.

While Bermuda remains the core market for BF&M Life and BF&M General, the organization has been successful in its geographic diversification efforts, in particular the property/casualty line, with the acquisition and subsequent integration of Island Heritage, a specialty property/casualty writer domiciled in the Cayman Islands, and with property/casualty business written across 15 Caribbean islands.

The recently completed integration of the Bermuda and Cayman property/casualty operations is expected to produce economies of scale and increase the organization’s overall efficiency, the rating agency said. The organization’s investment income has experienced substantial fluctuations, primarily from changes in the fair value of fixed-income securities due to movement in interest rates. In addition, during 2015, investment earnings were impacted by mortgage impairments, including a $6.5 million write-down of a large mortgage.