RATING ACTION:
On June 15, 2022, CariCRIS reaffirmed the assigned ratings of CariA- (Foreign and Local Currency Ratings) on the regional rating scale, and ttA- on the Trinidad and Tobago (T&T) national scale for The Beacon Insurance Company Limited. A stable outlook was assigned.
RATING SENSITIVITY FACTORS:
Factors that could, individually or collectively, lead to an improvement in the ratings and /or outlook include:
- An improvement in market share of general insurance products in its largest markets, T&T to 10% or more.
- An improvement in the overall credit profile for Beacon’s fixed income portfolio where more than 60% of the portfolio is rated investment grade on the S&P rating scale.
- Enhancement of Beacon’s risk management through the complete rollout of an Enterprise Risk Management system.
- Increased profitability leading to an improvement in ROA and ROE to above 2.5% and 10% respectively for the next financial year.
Factors that could, individually or collectively, lead to a lowering of the ratings/or outlook include:
- A 2-notch deterioration of the credit rating of Beacon’s top reinsurer.
- A deterioration of the company’s capital adequacy ratio of 150% or lower on a sustained basis for at least 6 months.
RATING RATIONALE
Caribbean Information and Credit Rating Services Limited (CariCRIS) has reaffirmed the currently assigned Issuer/Corporate Credit Ratings of CariA- (Foreign and Local Currency Ratings) on the regional rating scale and ttA- on the Trinidad and Tobago (T&T) national scale to The Beacon Insurance Company Limited (‘Beacon’ or ‘the Company’). These ratings indicate that the level of creditworthiness of this obligor, adjudged in relation to other obligors in the Caribbean and within T&T is good. CariCRIS also recommends the reaffirmation of the Company’s financial strength rating of CariA- which indicates that the Company’s relative ability to meet its ongoing insurance obligations is good.
CariCRIS further recommends the maintenance of a stable outlook on the ratings. The outlook is based on our expectation that Beacon will maintain good profitability over the next 12-15 months driven by continued good revenue performance. In FY2021, the Company’s return on assets and return on equity improved slightly to 2.8% (2.7% previously) while return on equity decreased slightly to 10.8% (11.8% previously). Both ROA and ROE were above CariCRIS’ expectations of 2.5% and 10% respectively. Should the Company’s return metrics meet or surpass CariCRIS’ expectations in the next financial year, we may increase the Company’s earnings parameter. Additionally, Beacon is expected to place focus on the enhancement of its systems and procedures as the Company takes steps toward the improvement and implementation of a comprehensive Enterprise Risk Management (ERM) framework. Should this implementation be successful, the Company may experience an improvement in its systems and procedures risk rating paramet
Analysts’ Contact Info:
Keith Hamlet
Mobile : 1-868-487-4356
Sultan Mohammed
Mobile : 1-1868-362-7304
Disclaimer: CariCRIS has taken due care and caution in compilation of data for this product. Information has been obtained by CariCRIS from sources which it considers reliable. However, CariCRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. No part of this report may be published / reproduced in any form without CariCRIS’ prior written approval. CariCRIS is also not responsible for any errors in transmission and especially states that it has no financial liability whatsoever to the subscribers/ users/ transmitters/ distributors of this product.