OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a-” (Excellent) of Bahamas First General Insurance Company Limited (BFG) (Nassau, Bahamas) and Cayman First Insurance Company Limited (CFI) (Cayman Islands), the property/casualty operating subsidiaries of Bahamas First Holdings Limited (Nassau, Bahamas) (BFH). The outlook of these Credit Ratings (ratings) is stable.
The ratings of BFG and CFI reflect the group’s consolidated balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
The balance sheet strength is derived from the group’s risk-adjusted capitalization being at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). This assessment is partially offset by high reinsurance dependence to protect surplus and earnings in the event of major catastrophic events. During 2020, continued surplus growth was primarily driven by underwriting gains at BFG and CFI, partially offset by unrealized losses on the Commonwealth Bank equity holdings. Furthermore, capital growth continues to be constrained because of the operating companies’ continuing obligation to pay dividends to BFH to service its outstanding debt.
In non-catastrophe years, the group has a history of solid earnings supported by underwriting gains and investment income, resulting in solid profitability metrics as evidenced by its five-year average return metrics. The group’s operating performance in 2020 was favorable despite an economic shutdown in the Bahamas and Cayman Islands from the COVID-19 pandemic. Overall earnings are primarily driven by the property and motor lines of business in the Bahamas and the health and motor lines of business in the Cayman Islands. The motor lines of business in both operating territories benefited significantly from lower motor claims as a result of government restrictions due to the pandemic.
AM Best views the group’s business profile as neutral. The group maintains leading market positions and operations in the Bahamas and Cayman Islands, and benefits from product and geographic diversification, which has helped to stabilize earnings through market cycles and reduce the impact of catastrophic events.
Although somewhat volatile due to catastrophes, AM Best anticipates that the group will continue to produce favorable earnings in non-catastrophe years, and that its risk management capabilities and comprehensive reinsurance program will continue to keep its balance sheet strength at the strongest level.
This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
Copyright © 2021 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.