By NEIL HARTNELL
Tribune Business Editor
FAMILY Guardian yesterday saw its top financial strength and creditworthiness rankings affirmed by the insurance industry's leading global rating agency.
A.M. Best confirmed the BISX-listed life and health insurer's A- (Excellent) financial strength rating, and the 'a-' long-term issuer credit rating (Long-Term ICR). It also confirmed the 'bbb-' long-term issuer credit rating for Family Guardian's parent, FamGuard Corporation, and placed a 'stable' outlook on the entire group.
A. M. Best said the ratings reflected Family Guardian's consistent annual profits, "improved operating performance" and solid capitalisation. However, as with its main rival, Colina Insurance Company, the rating agency expressed concern about the insurer's mortgage exposure and associated delinquency levels.
"Family Guardian has a more-than-adequate level of risk-adjusted capitalisation, and a sustainable marketing presence as one of the two leading life insurance companies in the Bahamas," it said.
"A.M. Best further notes that company trends with respect to profitability and capital are generally favourable, with consistent growth in stockholders' equity despite shareholder dividend payments. Family Guardian's core life and health business segments provide business diversification and competitive advantages in a generally limited and mature marketplace."
On the downside, A. M. Best added: "Still, Family Guardian faces inherent risks associated with the overall weak economic environment in the Bahamas, which can present risks to longer-term financial results and growth opportunities. "A.M. Best recognises that despite the limited growth opportunities in its local market, Family Guardian has been able to grow premium income in core business lines. "A.M. Best remains concerned regarding the risks associated with Family Guardian's high concentration in mortgage loans, but notes that the company's level of mortgage loans as a percentage of total investment assets, as well as a percentage of total capital, has 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."