OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of a- (Excellent) of Family Guardian Insurance Company Limited (Family Guardian). Concurrently, AM Best has affirmed the Long-Term ICR of bbb- (Good) on FamGuard Corporation Limited (FamGuard). Both companies domiciled in Nassau, Bahamas. The outlook of these Credit Ratings (ratings) is negative.
The ratings reflect Family Guardian’s balance sheet strength, which AM Best assesses as strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
The balance sheet strength assessment reflects risk-adjusted capital at the strongest level, low financial leverage and good liquidity, which is partly offset by the company’s limited investment options and high concentration of sovereign debt holdings. The company’s mortgage loan portfolio has been declining as a portion of its total investment portfolio, but allocations to mortgage loans remain elevated.
Family Guardian’s operating performance remains strong, with return on equity levels consistently over 10% and positive net earnings which have supported capital growth. The business profile assessment considers Family Guardian’s good market position in the Bahamas and creditworthy product offerings offset by its geographic concentration in the Bahamas. The company’s ERM framework and governance structure are appropriate for its risk profile.
The negative outlooks reflect AM Best’s concern regarding global economic conditions and their negative impact on territories in the Caribbean. Regional territories in the Caribbean are impacted materially by tourism and energy factors, which are being affected in the short term by global conditions. The negative outlooks also reflect AM Best’s concern that these conditions could result in volatility in the operating performance and deterioration in the company’s risk based capitalization of these insurers in the short to intermediate term. AM Best will continue to monitor the conditions in the Bahamas and take appropriate rating actions as conditions change.
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