AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” (Good) of Redbridge Insurance Company Limited (RICL) (St. James, Barbados). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect RICL’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.
The ratings also reflect the company’s strongest level of risk-adjusted capitalization as of year-end 2022, as measured by Best’s Capital Adequacy Ratio (BCAR), sound business strategy and its experienced management team. Partially offsetting these positive rating factors is the challenging environment in which the company operates, which could pressure future growth and underwriting performance.
RICL is an insurance and reinsurance company founded in December 2010, and is part of Redbridge Holding, LLC (Redbridge Holding), a company specialized in the management of insurance and reinsurance. Most members of the management team have worked together for many years in developing and expanding RICL; consequently, the company has achieved significant growth in recent years. During 2020, a set of companies originally falling under Redbridge Holding were incorporated into the organizational structure of RICL. These companies provide their services primarily to RICL, further bolstering management’s commitment to expanding RICL.
RICL’s main line of business is health insurance, with a complete network of operations that has enabled growth in the Latin America and Caribbean markets. As of December 2022, health insurance composed 93% of RICL’s portfolio, with life insurance representing 4%, and the remaining 3% in property and casualty. The company is diversified geographically among 54 countries in the Caribbean and Latin America, with its largest concentration in Venezuela (23%).
Two capital contributions of USD 1 million in 2019 led to improvement in RICL’s risk-adjusted capitalization. From 2020 and onward, the company’s risk-adjusted capitalization reflects the incorporation of the new entities to the organization. Overall, the balance sheet appears stronger after the consolidation, but is still subject to volatility derived from the company’s net business portfolio distribution and growth, as well as from changes in the asset structure.
RICL’s loss ratio decreased in 2022 compared with the previous period, reflecting changes in the management of the underwriting portfolio. Moreover, after the incorporation of the new entities into the organization in 2020, the cost-revenue structure of the company has shifted, and this improved profitability. The company has maintained its retention, and continued underwriting at a healthy volume with respect to the growing capital base.
Positive rating actions could occur as a result of the successful execution of RICL's expansion strategy. Negative rating actions could occur if premium growth or underwriting results erode the company's capital base and reduce its risk-adjusted capitalization to a level that no longer supports the ratings. Negative rating actions could also occur as a result of a deterioration in the profile of RICL's holding company.
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Olga Rubo, FRM
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