MEXICO CITY: AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” of RF&G Insurance Company Limited.

The outlook of these Credit Ratings remains stable. The ratings reflect RF&G’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

RF&G is the leading property/casualty insurer in Belize, with over a 50% market share of this segment. The company is wholly owned by its holding company, G.A. Roe & Sons Limited (ROE), which operates as a finance, management and investment company.

RF&G was established in Belize in 1964, and the insurance operation was called Horncastle (British Honduras) Ltd. In 2005, ROE acquired Regent Insurance and merged the operations, resulting in a 2008 name change to RF&G Insurance. RF&G’s business portfolio as of year-end 2018 was composed of fire (57%), motor (22%), casualty (17%), marine (2%), and aviation, bonds and title (approximately 2%).

AM Best considers RF&G’s balance sheet to be very strong; risk-adjusted capitalization reflects the company’s conservative risk appetite supported by an adequately set reinsurance program. Nevertheless, the volume of its capital, gross exposure to catastrophic risk and reinsurance dependence limits AM Best’s view of the company’s balance sheet strength.

Additionally, AM Best considers ERM to be appropriate given its comprehensive and appropriate risk framework, and the low complexity of its operations.

AM Best considers the company’s operating performance as of December 2018 to be adequate, with improving loss ratios due to successful adjustments in underwriting and due to a normalization of the loss ratio in comparison with previous years when weather-related claims under the fire account caused this indicator to deteriorate.

The company also experienced better performance as of June 2019 in general, specifically in its motor segment, generating positive net results. Despite RF&G being able to grow and remain as a market leader, Belize’s scarce growth opportunities limit the company’s ability to improve its business profile and operating performance.

The management team has mitigated this factor during the past few years by focusing on underwriting quality, rendering AM Best’s view of the business profile to neutral.

Positive rating actions could take place in the intermediate term if RF&G maintains its risk-adjusted capitalization while further mitigating the impact to its capital base arising from catastrophic exposures. Negative rating actions could take place if the company presents lower risk-adjusted capitalization derived from volatility in its net results or from capital outflows.