Best Affirms Sagicor ‘A-‘ Rating

August 9, 2005

A.M. Best Co. announced that it has affirmed the financial strength rating of “A-” (Excellent) of Sagicor General Insurance Inc. (Bridgetown, Barbados) with a stable outlook.

“The rating reflects Sagicor’s solid risk-based capitalization, excellent operating performance, consistently prudent underwriting leverage position and an expanding market presence in the Caribbean,” said Best.

The rating agency noted: “Sagicor is among the leading insurers in Barbados with operations that extend into the Cayman Islands, Dominica and St. Lucia, as well as St. Vincent and Trinidad and Tobago. Management’s disciplined underwriting practices and appropriate risk pricing have enabled the company to achieve consistently positive operating results. Given the catastrophe-exposed region in which Sagicor operates, a conservative underwriting approach is imperative in minimizing risk exposure. This is achieved through management’s strategy of providing appropriately priced products and territorial diversification. In addition, Sagicor benefits from being part of the Sagicor Financial Corporation, one of the largest financial services organizations in the Caribbean.”

However Best indicated that “significant property losses incurred by Sagicor in the Cayman Islands due to Hurricane Ivan and the increasingly competitive insurance environment in the region” should be considered as partially offsetting factors.

“During 2004, Sagicor incurred losses from Hurricane Ivan totaling $24 million, which resulted in the weakening of its risk-based capital position. In response, the company purchased additional catastrophe reinsurance and lowered the net retention level of its catastrophe program,” Best continued. “The reinsurance transactions produced a current level of risk-based capitalization that remains fully supportive of Sagicor’s rating. Furthermore, Sagicor operates in a challenging Caribbean insurance market, which has become increasingly competitive as indigenous insurers expand to new territories challenging established companies for market share.”

Best also noted that “Sagicor is a member of the Sagicor Financial Corporation, a financial services company offering a wide range of products and services in the Caribbean, Latin America and United States. At December 31, 2004, the Sagicor Financial Corporation maintained approximately $2.0 billion in assets under management.”

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