Last August, the US rating agency AM Best downgraded Clico’s issuer credit rating, while affirming the locally-based company’s financial strength rating. In a statement, AM Best said that the downgrading of Clico’s issuer credit rating reflected “its continued high exposure to affiliated investments.”

The rating agency observed that as part of its investment strategy, Clico maintained a “high concentration in related party assets, including large holdings in the banking and financial services, energy and manufacturing sectors.” According to AM Best: “While these assets have continued to perform well, AM Best has concerns with the liquidity of Clico’s non-quoted affiliated assets as part of its asset liability matching programme. Clico also has experienced rapid growth in its annuity and pension lines of business.

“Additionally, the downgrading of the ICR reflects AM Best’s belief that despite management’s recent efforts to diversify away from affiliated investment holdings and related party transactions, this may be a medium to long-term process before Clico achieves a reasonable level of related party investment exposure.”