Jun 2009 Financial News

GHL responds to rating downgrade

Jun 22, 2009

The financial crisis and devaluation of the Jamaican dollar and the British pound have contributed to the AM Best ratings agency putting a negative outlook on the financial strength of Guardian Life of the Caribbean (GLOC), said Jeff Mack, chief executive officer of Guardian Holdings Ltd.

GHL is the parent company of GLOC. “As communicated many times, the current financial crisis, combined with the accounting mandates of internationally recognised best practices as adopted by GHL, have created non-cash mark-to-market accounting losses to GHL’s financial assets.”

“In addition, the financial crisis has caused a devaluation of the Jamaican dollar and Great Britain pound versus the TT dollar. The consolidation of these currencies into GHL accounts, have impacted, in a non-material way, GHL’s equity position, and have led AM Best to put a negative outlook to our ‘excellent’ rating,” Mack said in a statement issued yesterday. Responding to AM Best announcing on Wednesday that it had downgraded GLOC’s financial strength rating (FSR) from A (excellent) to A- (excellent), and issuer credit rating from A to A-.

Mack said Best’s excellent rating of GLOC and Guardian General means these companies have an “excellent ability to meet future policyholder obligations.” Mack said the statutory funds of these two companies remain well above the levels required by the Central Bank. “These two companies have leading market share positions in their respective markets, and on a standalone basis, would have achieved a higher rating from AM Best,” Mack said.

“These are conditions and circumstances which have affected all financial service companies, and rating agencies like AM Best have reacted by downgrading the financial strength ratings of many firms like GHL. “As market conditions continue to improve, we expect the mark-to-market losses to reverse themselves and have a concomitant positive effect on GHL and our financial strength rating,” Mack stated.

Source: Trinidad Guardian
http://guardian.co.tt/business/business/2009/06/19/ghl-responds-rating-downgrade
22-06-09