By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Family Guardian's continued organic growth resulted in the renewal of its financial strength ratings despite concerns over exchange controls that restrict its investments and expansion.

AM Best, the leading international insurance rating agency, affirmed the life and health underwriter's financial strength rating of A- (Excellent) and long-term Issuer credit rating of "a-". It also affirmed the long-term issuer credit rating of "bbb-" for its BISX-listed parent, FamGuard Corporation. The outlook for all credit ratings was stable.

"The ratings reflect Family Guardian's balance sheet strength, which AM Best categorises as strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM)," AM Best said.

"Family Guardian's balance sheet strength assessment is supported by its strong level of risk-adjusted capitalisation and sustained trends of actual capital growth, and adequate liquidity position.

"Partially offsetting the strong level of risk-adjusted capital is its limited investment diversification. Exchange control regulations in The Bahamas limit the company's ability to diversify its investment portfolio meaningfully, resulting in the company holding a high proportion of sovereign securities and mortgage loan assets. AM Best notes that while the company's allocation to mortgage loans is elevated, the level of non-performing loans is low and decreasing."

The rating agency then conceded: "Additionally, mortgage loans as a percentage of equity has continued to decline, and AM Best views this risk exposure as manageable. The company's operating performance is considered to be strong based on a long-standing trend of profitability, including strong returns on equity, earnings diversity and low overall volatility. AM Best expects these operating performance trends to continue based on projections and recent performance measures."

It concluded: "While Family Guardian continues to generate positive earnings and has a good market position in The Bahamas, it operates almost exclusively in The Bahamas, limiting its ability to achieve meaningful growth. Growth is further impacted by the health of The Bahamas economy, which relies heavily on tourism and can be impacted by individual weather events such as hurricanes.

"AM Best recognises that despite the limited growth opportunities in its local market, Family Guardian has been able to grow premium income in core business lines. Family Guardian's core life and health business segments provide business diversification and competitive advantages in a generally limited and mature marketplace. AM Best considers Family Guardian's ERM programme to be appropriate for the company's risk profile. The company has a good risk management oversight structure, a well-developed framework and clear risk appetite and tolerance levels in place."