Guardian's exposure to Jamaica

Observer writer

Sunday, April 15, 2018

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Despite affirming positive credit ratings for Guardian Holdings Ltd (GHL) and its subsidiaries, a credit-rating agency recently expressed concern about “GHL's exposure to the country risk associated with Jamaica”; in particular, NCB Financial Group's bid to secure a controlling stake.

AM Best, a global credit rating agency for insurance companies based in New Jersey, USA, last month affirmed an “A” (excellent) financial strength rating and an “A” long-term issuer credit rating (ICR) for Guardian Life of Caribbean Ltd (GLOC) and Guardian General Insurance Ltd (GGIL).

Guardian Holdings Ltd received a “BBB” ICR, indicating that the outlook for the parent company of GLOC and GGIL is stable.

“The ratings reflect GLOC and GGIL's balance sheet strength, which AM Best categorises as strongest, as well as its strong operating performance, neutral business profile, and appropriate enterprise risk management,” the credit rating agency said in a press release.

“Nevertheless, GHL's exposure to the country risks associated with Jamaica, and to a lesser extent Trinidad and Tobago, through its life and non-life operations remains an area of concern, the release continued.

Though NCB's decision to acquire a majority stake in Guardian Holdings — and therefore control of the company — did not factor in the affirmation of the credit rating, AM Best explained that it was carefully watching how the situation played out.

“AM Best notes the ongoing activity regarding NCB Financial Group's (Jamaica) offer to gain a controlling stake in GHL. Although this has no impact on the ratings of GHL and its subsidiaries at this time, AM Best will continue to monitor these activities closely in order to determine if the specifics of this potential change in control will warrant a rating action.”

In November last year NCB Financial Group announced its intent to purchase 74,230,750 ordinary shares in GHL valuing US$2.35 per share, which would increase its holding in the company to 62 per cent. The move came after NCB Financial Group acquired a 29.99 per cent stake back in May 2016.

However, on February 1 NCB Financial Group indicated in a release on the Jamaica Stock Exchange website that it had yet to receive approval from the Central Bank of Trinidad and Tobago and, as a result, extended the closing date to February 23.

Despite GHL shareholders subscribing for the offer in the amount 91,743,975 shares, the time period again elapsed. The matter is now under a probe by the Trinidad and Tobago Securities and Exchange Commission.

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