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Financial News

May 2009 Financial News

Outlook changes for Sagicor

May 05, 2009

INTERNATIONAL INSURANCE rating agency AM Best Co affirmed its 'A' rating on the financial strength and credit rating of many Sagicor Financial Corporation companies, but has revised its outlook from stable to negative for a number of Sagicor's operations.

AM Best said yesterday it had "affirmed the financial strength rating (FSR) of A (Excellent) and issued credit ratings (ICR) of "a" for Sagicor Life Inc. (Barbados) and its two operating life insurance subsidiaries, Sagicor Capital Life Insurance Company Limited (Bahamas) and Sagicor Life Jamaica Limited (Jamaica)".

However, it had "revised the outlook to negative from stable and affirmed the FSRs of A- (Excellent) and ICRs of "a-" of Sagicor General Insurance Inc. (Barbados), Sagicor General Insurance (Cayman) Ltd (Cayman Islands) and Sagicor Life Insurance Company (Sagicor Life in Austin, Texas).

"Concurrently, AM Best has revised the outlook to negative from stable and affirmed the ICR of "bbb" and debt rating of "bbb+" on US$150 million, 7.5 per cent senior unsecured notes, due 2016 of the ultimate parent, Sagicor Financial Corporation (Barbados), which is publicly traded on the Barbados, Trinidad, Jamaica and London stock exchanges."

According to AM Best, the negative outlook reflected "Sagicor Financial's significant revenue, asset and earnings exposure to a weak Jamaican economy".

The agency said the concentration risk in Jamaica was "highlighted by the low growth in gross domestic product (GDP) over the past decade, high inflation rates and a depreciating Jamaican dollar - all factors that could negatively impact future operating results for the group".

Additionally, it said the negative outlook reflected "the continuing drag on the consolidated equity of Sagicor Financial from statutory losses at Sagicor Life USA, due primarily to new business strain as the company executes its long-term growth strategy in the US life insurance market, as well as investment losses".

At the same time, AM Best "acknowledges Sagicor Financial's positive consolidated earnings performance, strong name recognition in the Caribbean Islands, favourable risk-adjusted capitalisation and the operating subsidiaries' access to additional capital sources from Sagicor Financial".

In a response issued last night, the company's vice-president (corporate communications) Melba Smith said the Barbados-headquartered company remained strong with the group's equity position at US$581.6 million.


Source:
Geralyn Edward
Nation News
Tuesday May 5, 2009

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