A.M. Best Co. has affirmed the financial strength rating (FSR) of A- (Excellent) and issuer credit ratings (ICR) of "a-" of Guardian Life of the Caribbean Limited (GLOC) and Guardian General Insurance Limited (GGIL).

Concurrently, A.M. Best affirmed the ICR of "bbb-" of Guardian Holdings Limited (GHL), a publicly traded holding company and ultimate parent of GLOC and GGIL. The outlook for all ratings is stable. GHL is listed on the Trinidad and Tobago and Jamaican stock exchanges. All companies are domiciled in Port of Spain, Trinidad.

The affirmation of the ratings of GLOC and GGIL reflect GHL's stable leverage position and consolidated balance sheet strength, favorable operating results and premium growth for the past several years. The consistent profitability of both GLOC and GGIL, which are core insurance subsidiaries of GHL, enhances the overall strength of GHL's balance sheet, debt servicing capabilities and consolidated total equity. Nevertheless, A.M. Best notes that the outstanding level of financial leverage at GHL remains somewhat high relative to its total equity. GHL's exposure in Jamaica through its life insurance subsidiary, although smaller than in prior years, remains an ongoing concern.

The ratings of GLOC acknowledge its strategic position within the GHL group, strong competitive advantage in the Trinidad and Tobago markets, consistently positive gains from operations at both life and pension and health insurance lines and its adequate level of risk-adjusted capitalization.

Offsetting these strengths are GLOC's moderately increased insurance benefits and claims expenses, the impact of continuing volatility in the local, regional and global equity markets and the competitive and mature nature of the Trinidad and Tobago insurance marketplace.

Key rating factors that could result in positive rating actions for GLOC include near-term reduced exposure to high risk markets, significant reduction in leverage at the holding company level and an expansion of the traditional life segment in GLOC's business mix. Key rating factors that could result in negative rating actions include increased Jamaican exposure coupled with heightened sovereign risk, higher leverage at the holding company level, spread compression as well as deterioration in the credit quality of its asset portfolio.

The ratings of GGIL recognize its leading regional market presence, historically profitable operating performance, adequate capitalization and the support and commitment of GHL. GGIL is the largest property/casualty writer in the Caribbean with a major presence in Trinidad and Tobago and several other markets in the region.

Partially offsetting these strengths is the increased frequency of catastrophic events in the region, the company's reliance on reinsurance to protect its earnings and surplus and the increasingly competitive regional markets in which GGIL operates.

Positive rating actions could occur if GGIL sustains its strong operating performance and capitalization in combination with an upgrading of the Trinidad's country risk rating. Negative rating actions could occur if either GGIL's operating performance or risk- adjusted capitalization is negatively affected beyond A.M. Best's expectations.

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Additional key criteria utilized include: "Evaluating Country Risk"; "Rating Members of Insurance Groups"; "Risk Management and the Rating Process for Insurance Companies"; "Understanding BCAR for Property/ Casualty Insurers"; and "Understanding BCAR for Life/Health Insurers." Best's Credit Rating Methodology can be found at ambest.com/ratings/methodology.

A.M. Best Company is an insurance rating and information source.

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