Sagicor Financial Company cited for ambitious strategy

Sagicor Financial Company cited for ambitious strategy | Insurance Business Canada

Life & Health

Sagicor Financial Company cited for ambitious strategy

Morningstar DBRS outlines rating considerations

Life & Health

By
Terry Gangcuangco

Morningstar DBRS has assigned an issuer rating and a senior debt credit rating of BBB (low) to Sagicor Financial Company, and a financial strength rating of A (low) to Sagicor Life Insurance Company and ivari. The credit ratings all have a stable trend.

“Sagicor has an ambitious strategy to become a leading North American life insurer and, in recent years, has raised capital and built an experienced executive team to achieve it,” the credit rating agency said.

Issuer

Security

Credit rating action

Credit rating

Sagicor Financial Company

Issuer rating

New rating

BBB (low)

Sagicor Financial Company

Senior debt

New rating

BBB (low)

Sagicor Life Insurance Company

Financial strength rating

New rating

A (low)

ivari

Financial strength rating

New rating

A (low)

Outlining the key credit rating considerations, Morningstar DBRS noted: “Sagicor Financial Company has an established financial services franchise in the Caribbean and a growing presence in the US and, more recently, in Canada through the acquisition of ivari in 2023…

“The company has a relatively diversified product offering in the life insurance and annuities space and a conservative fixed income-oriented portfolio with some exposure to non-investment-grade sovereign debt and bank loans in the Caribbean.”

Morningstar DBRS pointed out that Sagicor has delivered resilient earnings in recent years and is expected to generate a low double-digit return on equity following the ivari swoop and the accounting standard transition.

“Sagicor has adequate capital and liquidity buffers for its risk exposures, and while it has raised significant debt to fund its strategic objectives, Morningstar DBRS expects the company to be able to generate sufficient capital from the acquisition of ivari to lessen its debt burden over time.”

In terms of credit rating drivers, Morningstar DBRS said it would upgrade if Sagicor enhanced its financial flexibility through a material reduction in its financial leverage and an improvement in the fixed-charge coverage ratio.

“A sustained improvement in the company’s profitability and risk profile would also result in a credit ratings upgrade,” the rating agency said. “Conversely, Morningstar DBRS would downgrade the credit ratings if the ivari acquisition does not lead to the expected levels of additional profitability and capital generation.”

A credit ratings downgrade would also be the result of a significant decline in solvency ratios at the group or operating entity level.

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