AM Best Affirms Credit Ratings of BF&M Limited and Its Subsidiaries

AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a” (Excellent) of BF&M Life Insurance Company Limited (BF&M Life), BF&M General Insurance Company Limited (BF&M General) and Island Heritage Insurance Company, Ltd. (Island Heritage) (Cayman Islands). AM Best also has affirmed the Long-Term ICR of “bbb” (Good) of the parent company, BF&M Limited (BF&M). All companies are domiciled in Hamilton, Bermuda, unless otherwise stated. The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect BF&M’s balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

BF&M’s ratings and outlooks are underpinned by the strongest assessment, as measured by Best’s Capital Adequacy Ratio (BCAR). BF&M has a history of maintaining levels of capitalization more than sufficient to cover the underwriting and investment risks. BF&M’s financial results in 2020 were strong and primarily driven by the lower utilization rates driven by shelter-in-place measures directed by the Bermuda government in the first half of the year, as the COVID-19 pandemic rapidly affected the island. The company’s business profile is reflective of the solid market share it garners in its domestic market of Bermuda and geographic diversification of business throughout the Caribbean through its Island Heritage subsidiary, where it adds primarily property/casualty (P/C) premium. BF&M is focused on profitable growth, and in 2020, divested its majority ownership of Insurance Corporation of Barbados Ltd (ICBL), as ICBL’s financial results were not meeting BF&M’s expectations.

Premium growth from BF&M’s health line of business has been stagnant since the local government moved to fund its largest health provider and its authority, the Bermuda Hospital Board, with a block grant annually in 2019. This was considered phase one in what was expected to be a lengthy process toward a national plan, which has been delayed due to COVID-19 and general uncertainty of the longevity of the pandemic. AM Best will continue to monitor the developments of the Ministry of Health’s future market reform plans and how BF&M adapts to them.

BF&M’s significant catastrophe reinsurance protection and overall risk management philosophy are central to the organization’s efforts to mitigate negative financial impacts to the group. However, in 2020, there was minimal impact to the P/C operations from catastrophe loss. The main headwind for Caribbean insurers was the COVID-19 pandemic and the resulting containment measures, social distancing requirements, border closures, and declines in external demand that led to one of the worst economic contractions in the region’s history. Despite this, P/C results remained resilient because of the group’s strict underwriting guidelines and its ability to transition easily to a remote environment.

This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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