OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best Co. has affirmed the financial strength rating (FSR) of A- (Excellent) and issuer credit rating (ICR) of “a-” of Bahamas First General Insurance Company Limited (BFG). (Nassau, Bahamas). The outlook for both ratings is stable.
Concurrently, A.M. Best has affirmed the FSR of A- (Excellent) and ICR “a-” of Cayman First Insurance Company Limited (CFIC) (Cayman Islands). The outlook for these ratings is negative. Both companies are subsidiaries of Bahamas First Holdings Limited (BFH) (Nassau, Bahamas).
As the primary holding and major source of earnings for BFH, the ratings of BFG reflect its continued excellent capitalization, favorable operating performance and leading market share in the Bahamian market. These factors are supported by BFG’s conservative catastrophe program, underwriting controls, local market expertise and solid risk management programs. These positive rating factors are offset by BFG’s geographic concentration and catastrophe exposure, particularly to hurricanes in the Caribbean.
The ratings of CFIC recognize its improved capitalization and positive non-health operating results along with its expertise in the Cayman market. The negative outlook on CFIC acknowledges the drag on its operating results due to the losses emanating from the company’s accident and health lines of business. BFH’s management has developed and implemented strategies to reduce these losses and their effect on earnings. A.M. Best will continue to monitor the effectiveness of these strategies and CFIC’s integration into BFH’s existing operations.
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.
In regards to CFIC, a positive outlook revision trigger would include improved operating results for its health and accident book of business and organic surplus appreciation. Negative triggers could include equity erosion, increased operating leverage from its current levels as well as a decline in operating performance.
The principal methodology used in determining these ratings is Best’s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding Universal BCAR”; “Natural Catastrophe Stress Test Methodology”; “Rating Members of Insurance Groups”; and “Assessing Country Risk.” Methodologies can be found at www.ambest.com/ratings/methodology.
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