OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has downgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “bb” from “bb+” and affirmed the Financial Strength Rating (FSR) of B (Fair) of NCB Insurance Company Limited (NCBIC) (Jamaica). The outlook of these Credit Ratings (ratings) is stable. NCBIC’s direct banking parent is National Commercial Bank Jamaica Limited, which is traded on the Jamaica and Trinidad and Tobago stock exchanges.
The ratings reflect NCBIC’s balance sheet strength, which A.M. Best categorizes as adequate, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).
This rating action reflects the company’s growing concentration in single economy investment risk relative to capital levels compared with previous years. A.M. Best’s overall assessment of the company’s balance sheet strength reflects this increasing asset risk profile despite regulatory capital levels that are well above regulatory minimums. A majority of the company’s invested asset portfolio is comprised of Government of Jamaica bonds. Jamaica is categorized by A.M. Best as a country risk tier four (CRT-4), a ranking that denotes a stressed economic environment with high levels of economic and financial system risk and moderate levels of political risk that are placing a strain on wages and employment. This in turn has the potential to constrain NCBIC’s potential future growth and lower risk-based capital as measured by A.M. Best’s stochastic risk-based capital model. Given the concentration of invested assets held in Jamaican-related risks, growth in the company’s asset base will likely maintain these levels of risk adjusted asset exposures in the short to medium term.
While these challenges are clearly present, A.M. Best notes that NCBIC has been able to demonstrate a history of strong and stable financial performance to date. The company’s operating performance includes rising insurance premium revenues, strong investment spreads and increasing fee income resulting in good returns on equity.
NCBIC provides the Jamaica market with its core group life and creditor life products, sold through its banking parent. The company’s good market position in Jamaica and diverse, yet lower risk product profile are offset by significant concentration of its operations in Jamaica. The company’s ERM is considered as developed and appropriate for the company’s risk profile. The stable outlooks reflect A.M. Best’s expectation that the company will continue to operate with a similar business and operating profile.
This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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