MEXICO CITY--(BUSINESS WIRE)--A.M. Best has assigned a Financial Strength Rating of B++ (Good) and a Long-Term Issuer Credit Rating of “bbb” to RF&G Insurance Company Ltd (RF&G) (Belize). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect RF&G’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
RF&G is the leading property and casualty (P/C) insurer in Belize, with over a 50% market share of this segment. The company is wholly owned by its holding company, G.A. Roe & Sons Limited (ROE), which operates as a finance, management and investment company. RF&G was established in Belize in 1964 and the insurance operation was called Horncastle (British Honduras) Ltd. In 2005, ROE acquired Regent Insurance and merged the operations, resulting in a 2008 name change to RF&G Insurance. RF&G’s business portfolio as of year-end 2017 was composed of fire (58%), motor (21%), casualty (17%), marine (2%) and aviation, bonds and title (less than 2%).
RF&G’s balance sheet is considered very strong, as risk-adjusted capitalization reflects the company’s conservative risk appetite within its investment portfolio and adequately set reinsurance program. However, the volume of its capital and exposure to catastrophic risk limits capitalization. Additionally, ERM is considered appropriate given its comprehensive and appropriate risk framework, and the low complexity of its operations.
A.M. Best considers the company’s operating performance as of December 2017 to be adequate with improving loss ratios in comparison to previous years when weather-related claims under the fire account caused this indicator to deteriorate. The company also experienced better performance as of October 2018 in general, specifically in its motor segment, generating positive net results. Despite RF&G being able to grow and remain as a market leader, Belize’s scarce growth opportunities limit the company’s ability to improve its business profile and operating performance. The management team has been able to mitigate this factor during the past few years by focusing on underwriting quality, rendering A.M. Best’s view of the business profile to neutral.
Positive rating actions could take place in the intermediate term if RF&G is able to maintain its risk-adjusted capitalization while further mitigating the impact to its capital base arising from catastrophic exposures. Negative rating actions could take place if the company presents lower risk-adjusted capitalization derived from volatility in its net results or from capital outflows.
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