OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating (FSR) of B (Fair) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “bb” 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 AM Best categorizes as adequate, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM). NCBIC provides the Jamaica market primarily with universal and creditor life insurance products, disability and critical illness products and retirement products sold through its banking parent. The company’s balance sheet strength reflects its high concentration of sovereign debt and long-duration instruments and exposure to interest rate risks, offset by the absence of financial leverage and low reinsurance leverage. In addition, a majority of its invested asset portfolio is composed of Government of Jamaica bonds, the creditworthiness of which is categorized as below investment grade.
The company’s historical trends of strong operating performance is driven by the high yields associated with the company’s fixed income portfolio and resulting healthy spread income, along with underwriting profit derived from its life and health insurance businesses. While NCBIC has demonstrated a favorable operating profile, the company’s operations are concentrated in Jamaica, which AM Best categorizes as a country risk tier four (CRT-4).
The CRT-4 tier denotes a stressed economic environment with significant economic, financial and political headwinds that places strain on wages and employment, which in turn has the potential to constrain NCBIC’s potential future growth. Despite these challenges, AM Best notes that NCBIC has demonstrated a history of stable financial performance and expects the company to maintain this stable financial and operating profile going forward.
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