March 09, 2016 04:21 PM Eastern Standard Time
OLDWICK, N.J.–(BUSINESS WIRE)–A.M. Best has assigned a financial strength rating of B++ (Good) and an issuer credit rating of “bbb+” to Republic Insurance Company (Cayman) Limited (Republic Insurance) (Cayman Islands). The outlook assigned to both ratings is stable.

Republic Insurance’s ratings reflect the company’s established niche in the reinsurance of credit insurance and the strength of its parent, Republic Financial Holdings Limited (Republic Financial) [Trinidad & Tobago Exchange: RFHL]. Republic Financial has been in business for over 170 years and the leading bank in Trinidad & Tobago (T&T) in terms of total deposits and loans. The ratings also reflect Republic Insurance’s ability to generate consistent earnings as a result of its favorable loss experience and net premium growth. As a result of the consistent operating earnings and lack of shareholder dividend payouts, total equity continues to increase. This has resulted in a more-than-adequate level of risk-adjusted capitalization relative to the company’s liability profile. In addition, Republic Insurance maintains a relatively conservative investment portfolio, concentrated primarily in cash, cash equivalents and short-term investments. As a result, the company maintains a strong level of liquidity to handle its claims processing.

These strengths are partially offset by Republic Insurance’s limited business profile, as the majority of its net assumed premiums and earnings are generated from the reinsurance of credit insurance. However, the company is looking to expand its business profile with the reinsurance of mortgage term insurance beginning in the second quarter of 2016. An additional offsetting factor is the dependence of earnings and premiums originating in T&T, which A.M. Best categorizes as having a modest level of country risk. The lack of geographic diversification is not expected to change over the medium term, as the new mortgage term business will initially be written in T&T. Moreover, A.M. Best believes there is the potential exposure to heightened economic and political risks in the other countries Republic Insurance does business in. However, A.M. Best notes that there is only a modest amount of business being reinsured outside of T&T.

A.M. Best believes that the potential for a positive rating action could occur if there is an improvement in the credit profile of the banking parent, Republic Financial, or if the business profile improves considerably toward more geographic and/or product diversification.

Negative rating action could result from deterioration in risk-adjusted capitalization or operating performance as a result of deterioration in Republic Insurance’s core credit operations or if there is a material decline in the credit profile of the banking parent.

This press release relates to rating(s) that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2016 by A.M. Best Rating Services, Inc. and/or its subsidiaries. ALL RIGHTS RESERVED.

Contacts
A.M. Best
Tom Zitelli, +(1) 908-439-2200, ext. 5412
Managing Senior Financial Analyst
[email protected]
or
William Pargeans, +(1) 908-439-2200, ext. 5359
Assistant Vice President
[email protected]
or
Christopher Sharkey, +(1)-908 439-2200, ext. 5159
Manager, Public Relations
[email protected]
or
Jim Peavy, +(1) 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
[email protected]