Sagicor faces ratings downgrade
Standard & Poors Rating Agency has placed Sagicor Life and Sagicor Finance on CreditWatch with negative implications because of the inability of the Barbados-based insurer Sagicor to reduce its property and casualty business by selling its U.K.-based subsidiary, Sagicor at Lloyd’s.
The rating agency has signalled that it would be prepared to downgrade the financial institution if it does not sell Sagicor at Lloyds within three months.
In assessing Sagicor Life as ‘BB+’ Sagicor Finance as ‘BB’ rating (CreditWatch with negative implications), Standard & Poors said: “If Sagicor completes the sale in the following three months, we could affirm the ratings on the company. We would downgrade Sagicor if it fails to do so.”
Following is the statement from Standard & Poors:
“On June 13, 2013, Standard & Poor’s Ratings Services placed its ‘BB+’ financial strength and counterparty credit ratings on Sagicor Life Inc. and its ‘BB’ rating on Sagicor Finance Ltd.’s $150 million, 10-year senior unsecured notes on CreditWatch with negative implications.
“Our ratings incorporate our expectations that Sagicor will be able to significantly reduce its property and casualty (P&C) business. So far, the company failed to sell Sagicor at Lloyd’s, which specializes in P&C, but the company is still pursuing the sale.
“We would downgrade the company if the sale doesn’t materialize over the next three months. Based on our analysis, if the sale is not completed within that period, our capital adequacy calculations will erode and the company’s bottom-line results will continue to suffer losses in this business.
“If the sale is completed, our capital calculations and operating performance should remain in line with our expectations, and we could affirm the rating. However, due to the company’s large exposure to Jamaica (CCC+/Stable/C), which recently restructured its debt amid a stalled economy, the outlook will most likely remain negative.
“We expect to resolve the CreditWatch on Sagicor within the next three months. We could downgrade the company if it fails to formalize the sale during this timeframe. On the other hand, if this transaction is completed we could affirm the ratings.”
Details
| Date Posted | June 20 2013 |