Standard & Poor’s downgrades Sagicor Life two notches
BRIDGETOWN, WILLEMSTAD - The new year opened with news for Sagicor Corporation that was not good: On December 30, Standard & Poor’s Ratings Services (S&P) downgraded its life insurance subsidiary, Sagicor Life Inc., by two notches, from ‘BB+ to ‘BB-’’ – two notches deeper into “non-investment grade.”
S&P said the action was taken as a direct result of its lowering, on December 19, of the sovereign rating on Barbados to ‘B’ from ‘BB-’. At the same time, it said, it also lowered its rating on Sagicor Finance Ltd.’s US$150 million, 10-year senior unsecured notes to ‘B’ from ‘BB-’.
The ratings agency it also gave Sagicor the same negative outlook it gave to Barbados, due to Q “the critical role of regulations and funding for the insurer and provided that it passes our sovereign default stress test.” UNQ
And while Sagicor had indeed passed S&P’s default stress scenario for Barbados, the ratings were capped at two notches above the country of domicile due to its view that Sagicor had what it termed “high country risk sensitivity,” S&P said.
Sagicor Life represents 41.5 per cent of the group’s gross written premiums as of September 30, 2014, serving Barbados, Belize, the Eastern Caribbean, the Dutch Antilles, Panama, and T&T. of that amount, Barbados earned 13.2 per cent of gross written premiums as of September 30, 2014.
Another subsidiary, Sagicor Life Jamaica, representing 28.8 per cent, as of the same date, and operates in Jamaica and the Cayman Islands; while a third, Sagicor USA Inc., operates in the US and represents 29.7 per cent of gross written premiums.
The US subsidiary somewhat mitigated the exposure to high-risk Caribbean countries, S&P said.
However, S&P said it expected the company’s operating performance to continue to improve over the next two years.
Founded in 1840, Sagicor operates in 21 countries but most of its business comes from Barbados, Jamaica, T&T, and the US. As of September 30, 2014, the company’s business mix was 75.6 per cent life, 16.9 per cent health, and 7.5 per cent property and casualty insurance.