Apr 2007 Financial News

AM Best has negative outlook on Guardian Life

Apr 10, 2007

The financial services and insurance rating agency, AM Best Co, has affirmed the financial strength rating of “A” (Excellent) and the issuer credit rating of “A” to Guardian Life of the Caribbean Ltd.

The outlook for both ratings has been revised to negative from stable. Guardian Life is a major life insurance subsidiary of its publicly-traded holding company, Guardian Holdings Ltd (GHL), based in Trinidad and Tobago.

In a statement, AM Best said “The negative outlook reflects Guardian Life’s lower operating results; significant volatility in its overall earnings, due primarily to the impact of fluctuations in the value of its large equity portfolio; and net losses for the GHL group on a consolidated basis for the year ended 2006.”

The statement added that “Guardian Life’s significant investments in local equities included a large concentration in several regional stocks.

“Overall earnings of the company are highly dependent on stock market investment performance. The stock market in T&T suffered a large drop in 2006, following losses in 2005, and may continue to remain volatile going forward.

“A M Best will continue to monitor GHL and Guardian Life’s operating results from the impact of their large exposure to equities and other more volatile investments.”

The company added that on an operating basis, excluding the impact of stock market volatility, Guardian Life’s gains from its core insurance operations had demonstrated steady increases in recent years.

“In addition, the ratings also reflect the competitive nature of the Trinidad insurance market and continued integration challenges associated with acquisitions at the GHL level.

“The ratings continue to reflect Guardian Life’s integral role within the GHL group, its conservative reserving practices and diversified business profile.

Guardian Life continues to have a strong brand name recognition in Caribbean markets, with growth opportunities within the group insurance segment, as well as Latin American markets,” AM Best stated.

AM Best Co was founded in 1899, and is a full-service credit rating organisation dedicated to serving the financial services industries, including the banking and insurance sectors.


Source:
The Trinidad Guardian
Tuesday 10th April, 2007

http://www.guardian.co.tt/business2.html