AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” (Good) of M&C General Insurance Company Limited (M&C General) (St. Lucia). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect M&C General’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

M&C General has the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). After a decline in capital during 2023, mainly due to reduced capital upon M&C General’s sale to RF&G Insurance Company Limited (RF&G), the company’s BCAR scores for 2024 increased significantly. This was primarily attributed to increased available capital, from favorable retained earnings, and a more diversified bond portfolio that reduced asset risk, as measured by the BCAR. Like most Caribbean-domiciled companies, M&C General has a high dependence on reinsurance to manage capital exposure to catastrophe events. While its reinsurance dependence is high, the protection is adequate and placed with high quality reinsurers. Capital growth is expected to continue through favorable retained earnings offset by moderate dividends. M&C General’s investment portfolio is concentrated in St. Vincent and St. Lucia government bonds.

The company’s operating performance remains positive albeit with volatility over the past two years, based on increased reinsurance expenses and claims costs. Both underwriting and investment income figures have declined from historic levels. Near term improvement in operating earnings is noticeable as reinsurance costs have moderated.

M&C General has a limited business profile. The business is heavily concentrated in the property and auto segments with a geographic concentration in St. Lucia and St. Vincent in the Eastern Caribbean. While M&C General has a well-established local market presence, it operates in mature markets, which limits the potential for organic growth.

The ERM program is appropriate for M&C General’s size and scope. As a result of its acquisition by RF&G, the company now has a formalized corporate governance structure and risk appetite statement. RF&G has provided M&C General with more aggregate reinsurance cover than it could secure on its own, which should be viewed as further supporting the ERM program.

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