The FINANCIAL — OLDWICK, N.J. — A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) and issuer credit rating of "a-" of The Family Guardian Insurance Company Limited.
Family Guardian is a wholly owned subsidiary of Famguard Corporation Limited. The outlook for both ratings remains negative.
The rating affirmation reflects Family Guardian's more-than-adequate level of risk-adjusted capitalization to support its investment and insurance risks, overall profitable and recently improving operating results and sustainable marketing presence as one of the two leading life insurance companies in the Bahamas. A.M. Best notes that the trends in profitability and stockholders' equity continue to remain positive, with growth in stockholders' equity over the past five years despite dividend payments.
A.M. Best's continuing negative outlook reflects the concerns over Family Guardian's large asset allocation to mortgage loans and the elevated level of delinquencies in this portfolio, which is attributed to the current weak economic environment in the Bahamas as well as the non-performing status of some of these mortgage loans on a longer term basis. A.M. Best notes however that the level of mortgage loans as a percentage of total investment assets has declined over time. Of additional concern are Family Guardian's inherent risks associated with its group health division, led by BahamaHealth. These risks have led to unfavorable operating results in the group health line for the past two years, and while there has been a visible trend of improving results in this line of business, it remains a challenge for the company.
Family Guardian also has limited growth opportunities in the mature life insurance marketplace in the Bahamas. Concurrently, 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 in the Bahamas.
Source: A.M. Best
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