AM Best has affirmed the Financial Strength Rating of A- (excellent) and the Long-Term Issuer Credit Rating of “a-” of Bahamas First General Insurance and Cayman First Insurance, the property/casualty operating subsidiaries of Bahamas First Holdings. The outlook of these credit ratings is stable.
The ratings of Bahamas First General Insurance and Cayman First Insurance reflect the group’s balance sheet strength, adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM), according to the rating agency.
The balance sheet strength is derived from the group’s strong risk-adjusted capitalisation and the ability to raise capital. This is offset partially by a high dependence on the reinsurance markets to protect capital in the event of natural catastrophes. In addition, capital growth may be constrained because of the operating companies’ continuing obligation to pay dividends to Bahamas First Holdings to service its outstanding debt, AM Best noted.
In recent years, the group’s operating performance has been favourable, especially in years with little impact from major hurricanes affecting the Bahamas or Cayman Islands. Overall earnings have supported capital growth, despite highly competitive markets and difficult economic conditions.
The business profile is considered neutral because of the group’s market position and operations in the Bahamas and the Cayman Islands. The geographic diversification and product mix help to stabilise earnings through market cycles and reduce the impact of catastrophic events, the rating agency said.
AM Best anticipates that the group will continue to produce favourable earnings in non-catastrophe affected years and that its strong surplus position and comprehensive reinsurance programme will continue to keep the balance sheet at the strongest level.