Sagicor Moves Barbados HQ After Downgrade
Sagicor Financial Corp plans to move the company’s headquarters out of Barbados after the island’s downgrade led to a rating downgrade of Sagicor Life.
The life insurance and financial service was downgraded by Standard and Poor’s last month, two weeks after the rating agency lowered the sovereign rating for Barbados from B to BB-.
The statement [PDF] said “S&P indicated that on a standalone basis Sagicor has a potential rating of “BB+”, which is supported by the company’s moderately strong capitalization, improving operating performance and adequate competitive position. However, the current rating action is as a result of the rating action on Barbados.”
“While Sagicor passes the default stress scenario for Barbados, a life insurer’s rating is capped by its country of domicile due to its high sensitivity to country risk, the critical role of regulations and access to funding. The rating action also considers Sagicor’s exposure to Jamaica, which is rated “B-”.
Prime Minister Freundel Stuart defended Sagicor Financial Corporation’s decision to re-domicile its registered office to a location outside of this island, saying it is not a loss of confidence in Barbados, according to a report from the Nation News.
He said, “Barbados will benefit from Sagicor’s improved performance in the same way that Canada, the United States and the United Kingdom benefit from the improved performance of their companies domiciled here! Directors have to make hard business decisions, and not decisions based on sentimentality!
“I wish Sagicor well, as we all should, as it continues to make its presence felt not only around the region but beyond it, and I look forward to the benefits that will flow to shareholders from this change of domicile.”
The Nation also reported that Sagicor CEO David Alleyne said while some public statements suggested that Sagicor’s operations, which employ 100 people in Barbados would be affected, this was untrue.
Mr. Alleyne said there would be no job losses nor increased policy premiums affecting Sagicor General customers in Barbados or elsewhere in the Caribbean as a result of the relocation.
Barbados has been having financial challenges for a while, and back in 2013 Barbados Finance Minister Chris Sinckler announced cost-saving measures that included approximately 3,000 public sector employees on the island losing their jobs.
Speaking in the Barbados Parliament in 2013, Mr Sinckler proposed that the process be spread over the period January to March 2014, starting with the first 2,000 job cuts by January 15th 2014, followed by the second tranche no later than March 1st 2014.
In addition, at that time the Barbados Cabinet also agreed on a 10% cut in the salaries of all Ministers, Government MPs, Parliamentary Secretaries, Personal Assistants, and other persons designated as political appointees in the employ of the government, and a 50% cut in the external travel budgets of all ministries and statutory boards.
Bermuda, which is ranked higher than Barbados, was downgraded last year by both Fitch and Moody’s, with Fitch downgrading Bermuda’s Country Ceiling to ‘AA’ from ‘AA+’, while Moody’s downgraded our rating to A1 from Aa3.
Following the Fitch downgrade last summer, the ratings agency said the downgrade does not currently impact their ratings of Bermuda-domiciled insurance companies, as Fitch generally views Bermuda-based re/insurance organizations as “being highly isolated from country-related risks in Bermuda.”
“The re/insurance companies that Fitch rates that are either Bermuda-domiciled or have significant subsidiaries in Bermuda are generally strong international organizations, with a large and diverse global profile,” Fitch said in 2014.
“These companies’ assets, insurance premiums and underwriting exposures are spread across many countries, with very little originating in Bermuda,” Fitch said in 2014.
“Bermuda-based insurers tend to hold very little if any Bermuda sovereign debt or Bermuda currency. They also maintain relatively minor investments in Bermuda banks and other Bermuda-based companies.
“While most Bermuda insurers have some level of deposits held at Bermuda banks, these amounts are generally quite limited. In addition, investment custodians are typically located outside of Bermuda.
“As a result of this very limited linkage of Bermuda-based re/insurers to the island’s fiscal issues and local economy, Fitch believes stress experienced by Bermuda would have minimal impact on the credit quality of its (re)insurers.”
Fitch did however downgrade Bank of N.T. Butterfield & Son Limited’s preferred stock rating to ‘A+’ from ‘AA-’ last summer, saying it “reflects the downgrade of Bermuda’s long-term foreign currency Issuer Default Rating to ‘A+’ from ‘AA-’ on May 30, 2014.”
“BNTB’s preferred stock rating is equalized with Bermuda’s foreign currency long-term IDR of ‘A+’, reflecting the guarantee from the government of Bermuda. The Ministry of Finance agreed to guarantee the principal and dividends on BNTB’s preferred stock when it was issued in 2009,” Fitch noted.
Last year Moody’s cited our “steep rise in government debt”, and Finance Minister Bob Richards recently confirmed that Bermuda will have to borrow money again this year.
The last official numbers from the Ministry of Finance stated that Bermuda’s gross debt stood at $2.185 billion at the end of September 2014.
Comments welcomed from all plp/biu talking heads!!!! Keep reading this article over and over until it finally sinks into your heads!!!!!
Barbados has a population of approx 286.000 and bermuda has a population of approx 65.000, which means we are about 22% the size of them!! They have a debt that amounts to about 4.5 Billion $$$, which is considered very dangerous by the IMF!!! We have a debt that is approx 2.2 billion $$$ and climbing, which is about 50% of Barbados!! Does anything more really be need to be said??? What is really going to take for the unions/plp members to understand OUR problems????
Unfortunately many will ignore the brutal truth and follow whatever instructions given to them by their “leaders”, who, for the most part are at the top of the wage pyramid.
So let me get this straight, in 2013 Barbados Finance Minister Chris Sinckler announced cost-saving measures that included approximately 3,000 public sector employees on the island losing their jobs.
This week, Barbados PM Freundel Stuart acknowledges one has to make “hard business decisions, and not decisions based on sentimentality!”
So, ..as Bermuda has been having financial challenges for a while, with a population approx. 23% of Barbados, perhaps we could let go some 690 public sector employees and/or alternatively suggest that there might be a career opportunity for Mr Chris Furbert, further south.
And if it’s good for Barbados…., maybe Bermuda too, with a 10% cut in the salaries of all Ministers, Government MPs, Parliamentary Secretaries, Personal Assistants, and other persons designated as political appointees in the employ of the government, and a 50% cut in the external travel budgets of all ministries and statutory boards.