OLDWICK, USA – AM Best has affirmed the financial strength rating of A- (excellent) and the long-term issuer credit rating of “a-” of Massy United Insurance Ltd. (Massy United) (Barbados).
The outlook of these credit ratings remains stable and reflect Massy United’s balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
Massy United’s balance sheet strength is reflective of its risk-adjusted capitalization being at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR).
The balance sheet also is protected by a comprehensive reinsurance program and exhibits adequate reserves and ample liquidity. Massy United is an indirect subsidiary of Massy Holdings Ltd., (Massy), a large Caribbean-based conglomerate that is publicly traded on the Trinidad and Tobago stock exchange.
Massy United’s balance sheet strength has been supported by historically profitable operating performance and prudent catastrophe risk management, which limits exposure to natural catastrophe events. However, capital growth may be constrained by the company’s dividend payments to Massy, its ultimate parent.
Overall earnings have been attributed to profitable underwriting supplementing net investment returns. Notwithstanding, earnings remain subject to a mature, highly competitive regional market, as well as a low interest rate environment and financial and economic instability in Barbados.
The company offers a full range of personal and commercial insurance products, including property and motor, in various Caribbean countries.
While the company launched a full operation in Jamaica earlier in the year, growth potential outside of mergers and acquisitions is very limited in its primary markets of Barbados, Trinidad and Tobago, Antigua and throughout the Caribbean in general. In addition, the Caribbean market periodically may be volatile due to severe weather events, as evidenced by hurricanes Matthew, Irma and Maria during the preceding two years.
However, the impact of large losses is mitigated materially by Massy United’s property catastrophe reinsurance program, which is mainly backed by high quality reinsurers.
The stable outlook reflects AM Best’s expectation that Massy United will maintain strongest balance sheet strength and favorable operating results in the near to intermediate term.
Positive rating action could occur if the company exhibits sustainable long-term improvement in operating performance, coupled with improvement in Barbados’ macroeconomic environment and country risk tier.
Negative rating action may occur if risk-adjusted capitalization declines to a level that no longer supports the current balance sheet strength assessment, if the country risk tier for Barbados is downgraded or if a trend of adverse earnings develops.