A.M. Best has upgraded the financial strength rating to A
(Excellent) from A- (Excellent) and the issuer credit rating to "a" from
"a-" of Caribbean Alliance Insurance Company Limited (CAIC)
(Antigua and Barbuda). The outlook for both ratings has been revised to
stable from positive.
The ratings upgrade reflects CAIC's superior risk-adjusted
capitalization, historically consistent and profitable operating results
and conservative management philosophy. Also reflected in the upgrade
are the company's effective risk management procedures, which include
its comprehensive reinsurance program used to mitigate CAIC's exposure
to natural catastrophes that are prevalent in the region.
CAIC has experienced significant organic surplus growth driven by robust
underwriting results and steady interest income earned from the
company's conservative investment portfolio. CAIC's risk-adjusted
capitalization and operating performance metrics consistently place the
company toward the top of its Caribbean peer group. The ratings are
further bolstered by CAIC's strong maret profile and its management
team's extensive knowledge of the territories in which the company
These positive rating factors are partially offset by CAIC's geographic
concentration in the Caribbean and its continued exposure to catastrophe
risks, making the company dependent on reinsurance for property lines of
business. Furthermore, insurance market conditions in the Caribbean have
been soft and increasingly competitive, and difficult overall economic
conditions throughout most of the Caribbean have persisted, negatively
impacting insurance growth and consumption.
A.M. Best believes that CAIC is well positioned at its current rating
level. Negative rating actions could occur if Antigua's country risk
tier is downgraded or if the company makes a material deviation from its
conservative growth trajectory. A significant decline in risk-adjusted
capitalization or operating performance also could add negative rating
The methodology used in determining these ratings is Best's Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best's rating process and contains the different rating criteria
employed in the rating process. Best's Credit Rating Methodology can be
found at www.ambest.com/ratings/methodology.
A.M. Best Company is the world's oldest and most authoritative
insurance rating and information source. For more information, visit www.ambest.com.
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