ICBL gets rating downgrade

Just 24 hours after BF&M announced its deal to sell the Insurance Corporation of Barbados Ltd, (ICBL) the company has been hit by a downgrade from international insurance rating agency A.M. Best.

In a release last night, A.M. Best said it had “downgraded the Financial Strength Rating to B++ (Good) from A- (Excellent), and the Long-Term Issuer Credit Rating to “bbb+” from “a-”.”

Equally significant was the decision of the global agency to place their latest rating of the Barbados-based insurer “under review with developing implications”.

ICBL chairman John Wight this week confirmed that parent company BF&M which he heads had agreed to sell its 51 per cent stake in ICBL to Paynes Bay Finance. No details were provided on transaction.

In offering an explanation for the downgrade, the rating agency signalled that ICBL had benefited from an enhanced status due to its status as a subsidiary of BF&M, a much stronger insurance group, headquartered in Bermuda.

It noted: “This rating action follows the announcement that BF&M Limited, ICBL’s majority shareholder, has sold its 51 per cent share ownership in ICBL to Paynes Bay Finance Inc., an investment vehicle owned and controlled by Joe Poulin through his family office, JPK Capital. The rating downgrades reflect the removal of rating enhancement that ICBL received from BF&M Limited.”

However, A.M. Best added: “The under review with developing implications status reflects the need for A.M. Best to assess the new majority shareholder, its strategic plans for ICBL and the potential impact on the company’s rating fundamentals. The ratings will remain under review until AM Best has conducted detailed discussions with JPK Capital and completes its evaluation of the transaction and the implications for ICBL.”

Of the current rating, the agency pointed out: “The ratings reflect ICBL’s balance sheet strength, which A.M. Best categorizes as strongest, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.”

BF&M bought the majority stake in ICBL in 2005 for almost US$26 million when the Barbados Government sought to divest some of its investments in state-owned corporations.

Wight, who is also BF&M’s chairman and chief executive officer described ICBL as an “excellent investment that had run its course over the past 15 years”. (IMC1)