AM Best Affirms Credit Ratings of BF&M Limited and Its Subsidiaries

AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of "a" of BF&M Life Insurance Company Limited (BF&M Life), BF&M General Insurance Company Limited (BF&M General) and Island Heritage Insurance Company, Ltd. (Island Heritage) (Cayman Islands). AM Best also has affirmed the Long-Term ICR of "bbb" of the parent company, BF&M Limited (BF&M). All companies are domiciled in Hamilton, Bermuda, unless otherwise stated. The outlook of these Credit Ratings (ratings) is stable.

The ratings of BF&M Life, BF&M General and Island Heritage reflect the companies' balance sheet strength, which AM Best categorizes as strongest, as well as their adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

BF&M primarily operates in Bermuda where it has solid market share in all of its lines of business. There is also off-island business written by Island Heritage that adds geographic and premium diversification as a large portion of this business is property/casualty products, offsetting BF&M's health premiums in Bermuda. The health business has been somewhat strained by regulatory changes in the Bermuda market. The government made changes to how services delivered at the Bermuda Hospitals Board are funded in 2019 in the first phase of proposed health reform. However, with the COVID-19 pandemic, regulators have tabled any movement forward into the next phase. AM Best will continue to monitor any developments regarding this issue. Revenues and earnings also have been impacted by the pandemic; however, the shelter-in-place directives by local authorities resulted in favorable utilization trends. AM Best expects near-term earnings to decline as a result of declining premiums from its health care line of business, higher operating expenses and lower investment returns due to market volatility.

BF&M's significant catastrophe reinsurance protection and overall risk management philosophy are central to the organization's efforts to mitigate negative financial impacts to the group. In 2019, Hurricane Dorian tested the effectiveness of the group's reinsurance protection, which functioned as expected. Despite the devastation and magnitude of losses, it was mainly an earnings event for the group. However, unpaid claims and associated reinsurance recoverables remain somewhat elevated at this time.

This press release relates to Credit Ratings that have been published on AM Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper media use of Best's Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best's Credit Ratings and AM Best Rating Action Press Releases.

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