AM Best Affirms Credit Ratings for Nagico Holdings Subsidiaries
- AM Best affirmed the credit ratings of Nagico Holdings Limited's subsidiaries in St. Maarten and Anguilla, reflecting strong balance sheet strength.
- The ratings were previously under review due to a proposed acquisition that was later abandoned, resulting in a change of majority ownership.
- Despite challenges from natural disasters, management is focused on improving profitability and expanding into less vulnerable markets.
In 2024, AM Best affirmed the Financial Strength Rating of B++ (Good) and Long-Term Issuer Credit Ratings of 'bbb+' (Good) for Nagico Holdings Limited's subsidiaries, National General Insurance Corporation (NAGICO) N.V. in St. Maarten and Nagico Insurance Company Limited in Anguilla. This decision followed the removal of the ratings from under review, which had been initiated in July 2021 due to a proposed acquisition by Peak Reinsurance Company Limited. However, management later indicated that the original transaction would not be completed, leading to a change in majority ownership to First Star Inc., which now holds 81.2% of Nagico. The ratings reflect Nagico's very strong balance sheet strength, supported by capital contributions from First Star aimed at enhancing the group's capital position. Despite the geographic spread of risk across the Caribbean, the company faces challenges due to exposure to natural disasters, necessitating reliance on a highly rated reinsurer panel to safeguard shareholder equity. Operating performance has shown significant improvement in 2023 and early 2024, attributed to reduced expenses and strategic re-underwriting of the property portfolio. However, Nagico's five-year average underwriting ratios and return metrics remain less favorable compared to other Caribbean property/casualty peers. Management is focused on mitigating hurricane exposure while expanding business in less disaster-prone segments. Despite being a dominant insurer in St. Maarten, Nagico operates in a highly competitive market amid economic challenges in the Caribbean, but AM Best anticipates continued profitability and growth in consolidated surplus.