Nagico Insurance gets B++ rating

POSTED: 04/4/12 11:48 AM

St. Maarten – A.M. Best Co. has affirmed the financial strength rating of ‘B++’ (Good) and issuer credit ratings of “bbb” of National General Insurance Corporation (Nagico) N.V., based in St. Maarten, and Nagico Insurance Company Limited (NICL),which is based in Anguilla. The outlook for all of the ratings is stable.
The ratings “reflect Nagico and NICL’s common ownership, adequate consolidated risk-adjusted capitalization, overall profitability in recent years and Nagico’s dominant market presence in its domestic market,” Best said.
“Nagico is the leading property/casualty insurer in St. Maarten with a dominant market share in the Dutch Caribbean, while NICL is one of the leading insurers in several overseas markets.” Best has also noted that the companies continue to report overall operating profits “on an individual and consolidated basis.”
“Given their common parent company’s minimal dividend requirements, both Nagico and NICL have been able to enhance capitalization through the retention of earnings. Consequently, both companies continue to maintain more than adequate risk-adjusted capitalization for their current business profiles. In addition, Nagico and NICL have implemented adequate risk management policies and procedures to assess and manage risks throughout their operations.”
As partial offsetting factors, Best cited the “increasingly competitive regional markets in which Nagico and NICL operate and the somewhat limited financial flexibility of both companies as a result of their private ownership structure.”
In addition Best noted that “both Nagico and NICL, like other regional insurers, have significant exposure to catastrophic losses. Both companies manage this risk through the utilization of reinsurance to limit their catastrophe exposure to a manageable level and to protect their surplus against frequency of catastrophic events.
While the ratings of Nagico and NICL are stable, factors that could contribute to rating enhancement include sustained improvement in their underwriting performance, consistent long-term overall profitability and an upgrade in St. Maarten’s and Anguilla’s country risk tier ratings.
Factors that may lead to negative rating actions include significant loss of consolidated market share, a sustained decline in underwriting profitability, significant deterioration in risk-adjusted capitalization as measured by Best’s capital model and a downgrade in St. Maarten and Anguilla’s country risk tier ratings.

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