Additionally, A.M. Best has downgraded the FSR to B+ (Good) from B++ (Good) and ICR to “bbb-” from “bbb” of Sagicor Life Jamaica Limited (SLJ) and placed the ratings under review with negative implications.
Concurrently, A.M. Best has placed under review with negative implications the ICR of “bbb-” and debt rating of “bbb” on $150 million, 7.5% senior unsecured notes due 2016 of the ultimate parent, Sagicor Financial Corporation (SFC) (Barbados). SFC is publicly traded on Barbados, Trinidad and London stock exchanges.
The under review status follows the announcement of a debt exchange program by the government of Jamaica, which A.M. Best notes is the second such program in three years. Under the program, eligible investors would receive new notes that have lower coupons and longer maturities. Given SFC’s exposure to the business and financial risks of Jamaica through its controlling interest in SLJ, the ratings of SFC and its subsidiaries have been placed under review with negative implications.
The downgrading of the ratings of SLJ reflects its sizeable exposure to the Jamaican government securities, as well as the ongoing pressures of the weak Jamaican economy. A.M. Best expects that the bond exchange will have a negative impact on SLJ’s risk-adjusted capital and earnings position.
The ratings will remain under review pending further clarification of the full impact of the exchange program on the results and capitalization of the group.
Reprinted from Caribbeannewsnow