AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Ratings of "a-" of Bahamas First General Insurance Company Limited (BFG) (Nassau, Bahamas) and Cayman First Insurance Company Limited (CFI) (Cayman Islands), the property/casualty operating subsidiaries of Bahamas First Holdings Limited (Nassau, Bahamas) (BFH). The outlook of these Credit Ratings (ratings) is stable.
The ratings of BFG and CFI reflect the group’s consolidated balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
The balance sheet strength is derived from the group’s risk-adjusted capitalization being at the strongest level. This assessment is offset partially by high dependence on reinsurance to protect surplus and earnings in the event of major catastrophic events, as was seen in 2019 when Hurricane Dorian negatively impacted results. Furthermore, capital growth may be constrained because of the operating companies’ continuing obligation to pay dividends to BFH to service its outstanding debt. Despite the significant impact of Hurricane Dorian, the group’s balance strength remains at the strongest level.
In non-catastrophic years, the group’s operating performance has been favorable; however, the significant impact on BFG’s 2019 results from Hurricane Dorian ultimately affected the group’s results. Generally, the company has experienced surplus growth from overall earnings, despite highly competitive markets and difficult economic conditions. The group has a history of solid earnings supported by underwriting gains and investment income. Profitability metrics remain strong as evidenced by solid five-year averages, with the health unit of CFI continuing to be a significant contributor in all years. Overall, AM Best considers the group’s operating performance as adequate.
AM Best views the group’s business profile as neutral. The group maintains leading market positions and operations in the Bahamas and Cayman Islands, and benefits from product and geographic diversification, which has helped to stabilize earnings through market cycles and reduce the impact of catastrophic events.
AM Best anticipates that the group will continue to produce favorable earnings in non-catastrophic years, and that its risk management capabilities and comprehensive reinsurance program will continue to keep the group’s balance sheet at the strongest level.
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