AM Best Affirms Credit Ratings of British Caribbean Insurance Company Limited

OCTOBER 31, 2024 09:36 AM (EDT)

AM Best Affirms Credit Ratings of British Caribbean Insurance Company Limited

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FOR IMMEDIATE RELEASE

OLDWICK - OCTOBER 31, 2024 09:36 AM (EDT)
AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of "bbb" (Good) of British Caribbean Insurance Company Limited (BCIC) (Jamaica). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect BCIC's balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management (ERM).

BCIC has the strongest level of risk-adjusted capitalization, as measured by Best's Capital Adequacy Ratio (BCAR). Risk-adjusted capitalization has improved in recent years, but remains susceptible to tail risk, which is evident by a decline in the BCAR on a catastrophe-stressed basis. The favorable trend in risk-adjusted capitalization is attributable to a decline in premium risk, as well as moderate growth in capital and surplus. Surplus growth has been achieved through steady earnings that have been derived from prudent underwriting and a conservative investment portfolio that is comprised primarily of cash and fixed income holdings. BCIC relies heavily on reinsurance to protect surplus and mitigate earnings volatility. Elevated reinsurance dependence risk is partially offset through the use of high-quality reinsurance partners.

Historically, BCIC has recorded strong operating results that have been derived from consistent underwriting gains and material investment income generation. Investment earnings compare favorably with the company's Caribbean property/casualty peer entities. However, profitability has declined somewhat in recent years predominantly due to costs associated with the implementation of a new insurance system, as well as expenses from IFRS-17 accounting and reinsurance. AM Best expects BCIC's operating results to return to a more normal level once the company completes its system implementation and benefits from the efficiencies it is anticipated to provide. Gross premiums written have grown steadily in each of the past five years. Starting in 2022, BCIC entered a quota share agreement on its Jamaica and Turks & Caicos motor portfolios which significantly reduced net premiums written in both 2022 and 2023. As property business is also heavily ceded, BCIC's retained risk is low and ceding commission income represents a material portion of total revenues.

The business profile assessment of limited is mostly reflective of BCIC's geographic concentration of business in Jamaica, which accounts for over 90% of gross premiums written. The company is a top player in Jamaica, with strong market share in both its property and motor segments. The remainder of premiums are generated from operations in Barbados and Turks & Caicos. BCIC offers a range of products, including property, motor, marine, accident, and liability, but property and motor make up most of the business.

BCIC has an established risk management framework that comprises governance structures, principles and processes, and parameters for risk management. AM Best assesses the company's ERM as appropriate for the size and scope of BCIC's operations.

This press release relates to Credit Ratings that have been published on AM Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best's Credit Ratings, Best's Performance Assessments, Best's Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best's Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.