Following this year’s analysis, both companies received a 2010 rating which puts them into the “excellent” category for financial strength, and their ability to meet ongoing policy and contract obligations. These ratings put GLOC and GGIL in an elite position within the world insurance market.

Together with providing ratings on the financial strength and credit worthiness of insurance companies, A.M. Best gives guidance as to the potential future direction of the company’s rating over an intermediate period of time, generally 12-36 months. In the case of GLOC and GGIL, A.M. Best assigned a negative outlook to their A- (excellent rating).

Both companies remain “Solid as a Rock,” with assets well above the statutory minimum, and in fact at levels that are the strongest in the region.
Here’s a bit more about A.M. Best. Further information can be obtained by visiting www.ambest.com.
 

Who is A.M. Best?

A.M. Best Company is a global credit rating organization.

Their ratings are based on a comprehensive quantitative and qualitative evaluation of a company's balance sheet strength, operating performance and business profile and are assigned to insurance companies such as Guardian or other legal entities authorized to issue financial obligations.

What type of rating did Guardian Holdings receive?

In a news release posted by A.M. Best on June 22, 2010, the company announced that both Guardian Life and Guardian General had retained its 2009 Financial Strength Rating (FSR): Guardian Life of the Caribbean Limited (GLOC) was rated A- (Excellent) and for the Issuer Credit Ratings (ICR) the company received an “A-". A.M. Best also affirmed the FSR of A- (Excellent) and ICR of "A-" of Guardian General Insurance Limited (GGIL).
Guardian Holdings does not, in itself, receive a rating since it is not an insurance company.

What does the A.M. Best rating mean?

A.M. Best’s website explains the ratings as follows:
 

AM Best's Financial Strength Rating is an independent opinion of an insurer's financial strength and ability to meet its ongoing insurance policy and contract obligations.
 

The company further categorizes any rating from A++ to B+ as ‘secure’ (in which both GLOC and GGIL have been rated) while ratings from B onwards are categorized as ‘vulnerable’. A rating of A- falls into the “excellent” category for financial strength.

Additionally A.M. Best gives details what is meant by a ‘negative outlook’.

Negative outlook indicates that a company is experiencing unfavourable financial and market trends, relative to its current rating level. If these trends continue, the company has a good possibility of having its rating downgraded...Positive or negative outlooks do not necessarily lead to a change in a company's rating.

To what unfavourable market conditions and or trends is the company likely to be exposed?

There are two areas which give rise to the negative outlook:
• One is the level of debt held at the holding company level (importantly - not the insurance company level). Our level of debt arose from the various acquisitions the holding company made during the first part of this decade. This debt has always been kept current due to the strong cash flows of the holding company’s subsidiaries and has been steadily paid down. While the actual debt levels are not high within the context of the industry, nevertheless it is higher than allowed for “A” rated companies. The recently announced IFC transaction will go a long way towards reversing this situation.
• The other area that gave rise to the negative outlook is the Group’s exposure to Jamaica. Jamaica’s economic issues are well chronicled. However, we believe that the recent IMF programme entered into by Jamaica has, and will, go a long towards reversing this negative factor.

Despite the concerns with Jamaica, the Group has thriving businesses there. Guardian Life Limited and West Indies Alliance are both core to our Group’s activities and we continue to be very bullish on those businesses.

Our recent decision to sell Guardian Asset Management of Jamaica had nothing to do with the A.M. Best outlook for Jamaica. We received an unsolicited offer for GAM Jamaica that we viewed as too good to pass up. This, together with the fact that the trading activities of GAM Jamaica are not core activities of the Group, led us to the decision to sell the business. The proceeds from this sale are foreseen to help in the further reduction of the aforementioned debt.

It should be strongly noted here that the activities of GAM in Trinidad and Tobago are strategic to the Group. Unlike GAM Jamaica, GAM Trinidad and Tobago has more of a “pure” asset management business model based on offering wealth accumulation products and services to our clients. This is a business we like a lot and is very complimentary to our insurance business.

You mention the IFC transaction. Can you explain this further? How will this help alleviate the negative outlook?

Earlier this year the International Finance Corporation (IFC) made a $US75 million ($TT475 million) investment in Guardian Holdings Limited, paying US$16 per share. The investment by the IFC, which is part of the World Bank, is significant in many ways:

• It strengthens our capital base
• It provides expansion capital for future potential acquisitions
• It improves our debt/equity ratio
• It signals to the marketplace that IFC believes both in the current operations of the company and in our future growth plans

Let me conclude by saying that we have done a great job building up two fantastic franchises in Guardian Life of the Caribbean and Guardian General. These two companies are the envy of our competitors and help place us Number 1 in the region for Life, Health, and Pension products as well as Property and Casualty products.

For the third consecutive year, World Finance has given the nod to Guardian Life of the Caribbean Limited as the Insurance Company of the Year for the Caribbean. We are the only company to receive this prestigious award for three consecutive years. In fact, no one else has won it two years in a row. This is no mean feat since the competition is intense and comes from across the Caribbean – this year, including the Spanish-speaking Caribbean.