The Tribune

BISX-listed Family Guardian Insurance Company has seen the world’s leading insurance credit rating agency reaffirm its top financial strength ratings.

A.M. Best has affirmed the company’s financial strength rating of A- (Excellent) and issuer credit rating of ‘a-’. It has also affirmed the issuer credit rating for the life and health insurer’s BISX-listed parent, FamGuard Corporation, giving it ‘bbb-’.

A. M. Best said the ratings reflected Family Guardian’s “improving financial performance and adequate reserves specific to its investment in direct residential and commercial loans”.

It added: “ While A.M. Best remains concerned regarding the risks associated with Family Guardian’s high concentration in mortgage loans relative to its total equity, and the current level of delinquencies in its mortgage loan portfolio, A.M. Best notes that the company’s level of mortgage loans as a percentage of total investment assets, as well as a percentage of total capital, have continued to decline. The company holds mortgage loan provisions which have proven to be adequate over time; A.M Best considers this risk exposure as manageable at the current time.”

A. M. Best said that while Family Guardian also “faces inherent risks associated with its group health division, the company’s results in this line of business have stabilised over the past several years.

“The overall weak economic environment in the Bahamas can present risks to Family Guardian’s longer-term financial results and growth opportunities,” the rating agency added.

“A.M. Best recognises that in spite of the limited growth opportunities in the local market, Family Guardian has recorded growth in premium income in core business lines.”

Counteracting all this, and ensuring the high ratings, A. M. Best added: “Offsetting these negative rating factors are Family Guardian’s more-than-adequate level of risk-adjusted capitalisation, overall profitable operating results fuelled by stabilisation in its group health division, and its sustainable marketing presence as one of the two leading life insurance companies in the Bahamas.

“A.M. Best further notes that the company trends are favourable with respect to profitability and capital, with consistent growth in stockholders’ equity despite shareholder dividend payments. Family Guardian’s three core business segments - home service, financial services and group division led by BahamaHealth - provide business diversification and competitive advantages in a generally limited and mature marketplace.”

A. M. Best said a rating upgrade was unlikely in the near term. It added: “Downward rating actions could result if a material deterioration were to occur in Family Guardian’s operating results, worsening delinquency rates within the mortgage portfolio are recorded, or there is deterioration in the Bahamian economic environment.”