Feb 2008 Financial News

A.M. Best Upgrades Ratings of Sagicor Life Insurance Company

Feb 21, 2008

A.M. Best Co. has upgraded the financial strength rating (FSR) to A- (Excellent) from B++ (Good) and the issuer credit rating (ICR) to “a-” from “bbb+” of Sagicor Life Insurance Company (Sagicor Life USA) (Austin, TX). Concurrently, A.M. Best has affirmed the FSR of A (Excellent) and the ICRs of “a” of Sagicor Life Inc. (St.Michael, Barbados) and its two operating life insurance subsidiaries, Sagicor Capital Life Insurance Company Limited (Nassau, Bahamas) and Life of Jamaica Limited (Kingston, Jamaica). In addition, A.M. Best has affirmed the ICR of “bbb” and debt rating of “bbb+” on USD 150 million, 7.5 % senior unsecured notes, due 2016 of Sagicor Financial Corporation (Sagicor Financial) (Barbados). The outlook for all ratings is stable.

The rating actions on Sagicor Life USA reflect Sagicor Financial’s new capital net worth maintenance agreement, which will result in planned and regular surplus contributions in support of Sagicor Life USA’s new business growth strategy. In addition, the ratings also reflect Sagicor Life USA’s integral role in developing and growing Sagicor Financial’s footprint in the life insurance market place in the United States.

Partially offsetting these rating factors are challenges faced by Sagicor Life USA in the execution of its long-term growth strategy, limited name recognition in the U.S. life insurance marketplace while facing intense competition from large life insurers, continuing strain on its surplus funds and weak statutory earnings as a result of an accelerated new business growth projections over the next few years and high exposure to collateralized mortgage obligations in conjunction with its spread based program with the Federal Home Loan Bank (FHLB).

The ratings of Sagicor Life Inc. and its two operating subsidiaries recognize Sagicor Financial group’s positive earnings performance, strong name recognition in the Caribbean Islands, favorable risk-adjusted capitalization and access to additional capital sources from their publicly traded ultimate parent, Sagicor Financial, on the Barbados, Trinidad and London Stock Exchanges.

Offsetting these positive rating factors is the more aggressive acquisition strategy employed within the organization and challenges, which may occur with integration, as well as the mature markets in which the Sagicor Financial group operates in the Caribbean life insurance market.

For Best’s Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.


Source:
The Trinidad and Tobago Stock Exchange
Wednesday 20th February, 2008