AM Best Removes From Under Review With Developing Implications and Affirms Credit Ratings of Nagico Holdings Limited’s Main Subsidiaries

AM Best has removed from under review with developing implications and affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Ratings of “bbb+” (Good) of the two operating subsidiaries of Nagico Holdings Limited – National General Insurance Corporation (NAGICO) N.V. (St. Maarten) and Nagico Insurance Company Limited (Anguilla) (collectively referred to as Nagico). The outlook assigned to these Credit Ratings (ratings) is stable.

The ratings reflect Nagico’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

Nagico ‘s ratings were originally placed under review on July 27, 2021, following the announcement that the group had entered into a definitive agreement with Peak Reinsurance Company Limited (Peak Re), whereby Peak Re would acquire Nagico’s remaining 50% of outstanding shares and become the group’s sole shareholder. This rating action follows the change in majority ownership to Nagico’s other shareholder, First Star Inc. (First Star), and AM Best’s subsequent discussions with Nagico wherein management advised that the parties will not complete the original transaction.

The very strong balance sheet strength assessment reflects Nagico’s strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). The current capitalization levels are mainly the result of the explicit support of its majority owner, First Star via capital contributions in 2023 and 2024, to enhance the group’s capital position, which brought First Star’s ownership of Nagico to 81.2%. Also, despite geographic spread of risk throughout the Caribbean, the group's exposures are in areas prone to severe natural catastrophic events, and as a result, the balance sheet strength assessment also reflects Nagico’s reliance on its highly rated reinsurer panel to protect shareholder equity against losses from these events.

Operating performance has improved significantly in 2023 and through June 2024, due to a significant reduction in expenses and continued re-underwriting of the property portfolio, which includes the reduction of aggregates in high wind regions and implementation of overall average rate increases. However, five-year average underwriting ratios and return metrics do not compare favorably with most of the other rated Caribbean property/casualty peers. Management remains focused on reducing exposure to hurricanes and natural disasters in its property segment, while increasing business written in non-cat exposed segments. AM Best expects operating results to continue to remain profitable and be accretive to consolidated surplus.

NAGICO produces and distributes its business through select agents, brokers and branch offices in 21 territories in the Caribbean. NAGICO is the dominant insurer in St. Maarten and a leading insurer in several of its markets. However, markets remain highly competitive and economies throughout the Caribbean remain economically challenged.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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