OLDWICK: AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a” of BF&M Life Insurance Company Limited (BF&M Life), BF&M General Insurance Company Limited (BF&M General) and Island Heritage Insurance Company.

Furthermore, AM Best has affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” of Insurance Corporation of Barbados Limited (ICBL).

AM Best also has affirmed the Long-Term ICR of “bbb” of the parent company, BF&M Limited.
The outlook of these Credit Ratings is stable.

The ratings of BF&M Life, BF&M General and Island Heritage reflect the companies’ balance sheet strength, which AM Best categorizes as strongest, as well as their adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

BF&M manages its health, life and property lines with a strong level of capital in support of its current business.

Consistent favorable net gains from its diversified and geographically disbursed products has contributed to long-term shareholder equity growth.

The core operating results from its Bermuda business in 2018 was a favorable offset to the higher reinsurance costs in the property/casualty business in the Cayman Islands, and in 2019, AM Best anticipates that it will also offset losses in the Bahamas resulting from Hurricane Dorian.

BF&M’s significant catastrophe reinsurance protection and its approach to risk management also contributed to mitigating financial impact to the group. While the company has provided loss estimates for Hurricane Dorian, AM Best will continue to monitor incurred gross and net losses to confirm the effectiveness of the group’s catastrophe risk management.

BF&M has solid market share in nearly all of its lines of business and is the second largest health insurer in Bermuda. Recent developments in local policy are affecting this market.

AM Best also will monitor the outcomes of Bermuda’s regulatory changes stemming from the island’s health reform, where the government has legislated changes to how services delivered by the Bermuda Hospital Board (BHB) are funded and any potential impact this could have on BF&M’s health business.

The island’s current fee-for-service model will be replaced by a set grant paid directly by the government to the BHB and the health system will have to manage costs to this.

The ratings of ICBL reflect its balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, limited business profile and appropriate ERM.

The ratings of ICBL benefit from risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). ICBL historically has produced positive net income driven by the underwriting and marketing expertise derived over its many years of risk and claims management.

However, operating performance has declined somewhat in recent years, driven by deterioration in underwriting results and the significant impact from losses associated with Barbados’ sovereign debt restructure in 2018. BF&M is the majority shareholder of ICBL, whose shares are traded on the Barbados Stock Exchange.

ICBL benefits from its strategic affiliation with BF&M and the implied support that could be provided if needed. The ratings also acknowledge the geographic concentration of ICBL’s business in Barbados and its considerable exposure to below investment-grade government bonds; in 2018, ICBL recorded a significant overall loss as a result of the impact of the Barbados government debt restructure.

Edited by Kiran Khan