Sagicor has received a credit rating upgrade from Fitch Ratings.
On October 21, the global credit rating agency announced that it “upgraded Sagicor Financial Company Limited’s Long-Term Issuer Default Rating to ‘BBB’ from ‘BBB-’”.
“Fitch has also “upgraded [Sagicor’s] senior unsecured debt to ‘BBB-’ from ‘BB+’”.
It stated: “The rating outlook is stable. Fitch has also affirmed the insurer financial strength rating of ivari at ‘A-’ with a stable outlook.”
Fitch said that the upgrade “reflects strengthening core profitability and two years of consolidated contributions from ivari, complemented by lower debt financing costs and a strong capitalisation profile”.
It added, however, that Sagicor’s continued exposure to below-investmentgrade sovereign holdings, including Barbados, “partly offset” these positives.
In a press release from the company, Sagicor president and chief executive officer Andre Mousseau welcomed the investment grade ratings and said: “We are pleased with this upgrade, which provides a unanimous view from our credit rating agencies that Sagicor’s senior unsecured debt is investment grade.
“This is further validation of Sagicor’s strong capitalisation as we pursue stable and profitable growth. This upgrade will provide Sagicor with enhanced access to capital as we execute our strategy.”
In its separate announcement, Fitch said that Sagicor, which operates in the Caribbean, Canada and
the United States (US), was “well diversified across business lines and geographies, with a business risk profile in line with its life insurance peers”.
Other positives noted by the credit rating agency included that Sagicor’s profitability was strengthening, and it had a “solid capital position”. Fitch also observed that while Sagicor’s investment risk improved post-ivari acquisition, “exposure to risky and belowinvestment- grade assets relative to shareholders’ equity remains above peers, amplified by sovereign holdings tied to local requirements”.
In this regard, it said, “Concentration is driven by Jamaica, with Jamaican sovereigns equal to 48 per cent of equity. Barbados and Jamaica carry positive outlooks, which could ease the sovereign cap over time.”
Fitch said factors that could lead to a downgrade of Sagicor’s rating included “significant deterioration in the operating environments and sovereigns of Jamaica, Trinidad and Barbados, which could lead to a material decline in operating performance and/or credit profile of [Sagicor] investment portfolio.
Factors leading to an upgrade included “no material deterioration in the operating environments and sovereigns of Jamaica, Trinidad and Tobago, and Barbados”.
(SC)
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