A.M. Best Affirms Ratings of The Family Guardian Insurance Company Limited; Maintains Negative Outlook

OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) and issuer credit rating of “a-” of The Family Guardian Insurance Company Limited (Family Guardian) (Nassau, Bahamas). Family Guardian is a wholly owned subsidiary of Famguard Corporation Limited [BISX: FAM]. The outlook for both ratings remains negative.

“Risk Management and the Rating Process for Insurance Companies”

The rating affirmation reflects Family Guardian’s more-than-adequate level of risk-adjusted capitalization to support its investment and insurance risks, overall profitable and recently improving operating results and sustainable marketing presence as one of the two leading life insurance companies in the Bahamas. A.M. Best notes that the trends in profitability and stockholders’ equity continue to remain positive, with growth in stockholders’ equity over the past five years despite dividend payments.

A.M. Best’s continuing negative outlook reflects the concerns over Family Guardian’s large asset allocation to mortgage loans and the elevated level of delinquencies in this portfolio, which is attributed to the current weak economic environment in the Bahamas as well as the non-performing status of some of these mortgage loans on a longer term basis. A.M. Best notes however that the level of mortgage loans as a percentage of total investment assets has declined over time. Of additional concern are Family Guardian’s inherent risks associated with its group health division, led by BahamaHealth. These risks have led to unfavorable operating results in the group health line for the past two years, and while there has been a visible trend of improving results in this line of business, it remains a challenge for the company.

Family Guardian also has limited growth opportunities in the mature life insurance marketplace in the Bahamas. Concurrently, Family Guardian’s three core business segments—home service, financial services and group division led by BahamaHealth—provide business diversification and competitive advantages in a generally limited and mature marketplace in the Bahamas.

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”; and “Assessing Country Risk.” Methodologies can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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