AM Best has upgraded the Financial Strength Rating to A- (Excellent) from B++ (Good) and the Long-Term Issuer Credit Rating to “a-” (Excellent) from “bbb+” (Good) of International Traders Insurance Co., Ltd. (ITICO) (Turks and Caicos Islands, British West Indies). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect ITICO’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
The upgrade of ITICO’s ratings recognizes the company’s expansion initiatives, which has decreased its concentration in terms of geographic diversification, distribution channels, clients and products, while maintaining strong operating performance metrics.
The ratings also reflect the company’s strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), supported by its consistent historical profitability. Partially offsetting these positive rating factors is the inherent execution risk of ITICO’s expansion and diversification initiatives.
ITICO is a reinsurance company with 40 years of experience in the sector. The company is domiciled in the Turks and Caicos Islands, and has a representative office in Panama through which it operates for different countries. The Panama office is recognized as its financial center for the region, which provides easy access to the Latin America and Caribbean markets. ITICO is owned by a pure holding company that is domiciled in the Cayman Islands.
Within the reinsurance market, ITICO stands out for its commercial relationships with the ceding companies and the structuring of reinsurance programs based on the needs of its clients.
As of December 2022, 28.4% of ITICO’s business portfolio was composed of fire, 24.2% of group life, and the rest in other business lines; it is diversified geographically primarily among Panama, and 24 other countries, mainly across Latin America and the Caribbean.
ITICO’s risk-adjusted capitalization stands at the strongest level for historical and projected years, due to its conservative investment base, low retention profile and a good quality of capital. Conversely, management is prone to use its capital efficiently, which might lead to dividends going forward.
The company’s overall results are characterized by sustained profitability, despite fluctuations in its volume of gross written premium. ITICO’s loss ratio has remained contained due to its prudent underwriting practices. The company’s investment income shows a stable trend, moderately supporting ITICO’s income generation.
Factors that could lead to positive rating actions include the continued growth of the company’s capital base in the medium term, supportive of the strongest level of risk-adjusted capitalization, as measured by BCAR, and successful consolidation of company’s business strategy in targeted locations, while maintaining strong operating performance. Negative rating actions could occur if premium growth or changes in the investment or its underwriting risk profile reduce risk-adjusted capitalization to a level that no longer supports the ratings, or if ITICO’s business strategy has an unfavorable development and increases concentration risk, or if there is a shift in the company's operating performance metrics to levels no longer consistent with the strong assessment.
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Olga Rubo, FRM
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