Sun | May 20, 2018

CariCRIS reaffirms Sagicor’s rating

Published:Wednesday | February 29, 2012 | 12:00 AM

The Caribbean Information and Credit Rating Services (CariCRIS) has reaffirmed the creditworthiness of Sagicor Life Jamaica based on the companys dominant market position, healthy profitability and good capitalisation levels.

CariCRIS has reaffirmed the rating of jmAAA on Sagicors debt of US$75 million, the agency said in a release.

The rating, said CariCRIS, indicates that the level of creditworthiness of this obligation, adjudged in relation to other obligations within Jamaica is the highest.

The rating agency said Sagicor continued to be well capitalised with a large tangible net worth of around J$21.9 billion as at September 2011, up 10.4 per cent from December 2010.

It said further said that Sagicor has continued to report profitability and growth despite the challenges posed by the local and global economies.

CariCRIS noted that the five-year averages for return on assets and return on equity were 4.2 per cent and 31.5 per cent respectively.

In comparison, CariCRIS said, regional banks have an average return on assets of around 2.5 per cent to 3 per cent, and an average return on equity of 25 per cent to 30 per cent.

It also noted that Sagicors underwriting performance remained relatively healthy, although elements of deterioration were detected in 2010. Profitability was further boosted by the conservative management of its investment portfolio, which accounts for around 35 per cent of its net premium over the past five years.

Sagicor, formerly Life of Jamaica Limited, is a majority owned subsidiary of the Barbados-based Sagicor Financial Corporation. This support, in the event of a crisis situation, also underscores the rating given, CariCRIS said.

Along with its life and health insurance business, Sagicor Life also has a big share of the pension fund market.

According to CariCris, the companys market share is estimated to be about 49 per cent for new life insurance business generation and 53 per cent of new policy sales, with the nearest competitor estimated at approximately 23 per cent.

In the pension funds segment, Sagicor Life Jamaica has a share of roughly 52 per cent of the $225 billion in assets under management.

In the group life and group health businesses, the companys market share is estimated at about 53 per cent and 75 per cent respectively.

However, CariCRIS said the rating is tempered by the company operating in a highly indebted economy characterised by limited fiscal flexibility.

Sagicor had 14 branches and 494 agents in Jamaica as at December 31, 2011.