Rating agency Caribbean Information and Credit Rating Services Limited (CariCRIS) has reaffirmed its ‘high’ creditworthiness rating for ANSA Merchant Bank Ltd (AMBL Group).
CariCRIS said it reaffirmed the assigned issuer/corporate credit ratings of CariAA foreign currency and local currency on the regional rating scale and ttAA (FC and LC) on the T&T national scale to ANSA Merchant Bank Ltd (AMBL Group).
These ratings included a single notch up for the high likelihood of support, if needed, from ANSA Merchant’s parent company ANSA McAL Ltd.
CariCRIS explained the regional scale ratings indicated that the level of creditworthiness of ANSA Merchant Bank, adjudged in relation to other obligors in the Caribbean, and within T&T, is high adding that the national scale ratings indicate that the AMBL Group’s creditworthiness, compared to other obligors in T&T, is high.
CariCRIS has also assigned a stable outlook on the ratings.
“The stable outlook is premised on our expectation that over the next 12 to 15 months, the AMBL Group will continue to have profitable operations, bolstered by the first full-year inclusion of Colonial Fire and General Insurance Company Ltd’s (Colfire) performance.
“This, in addition to continued growth in its core operations, supported by the implementation of marketing strategies, new products and digital initiatives, which are anticipated to support revenue growth and improve operating efficiencies.”
Furthermore, CariCRIS noted the AMBL Group is expected to remain well-capitalised, with strong liquidity and asset quality metrics, being able to comfortably meet its debt service obligations on time over the next 12 to 15 months.
“The ratings are driven by the AMBL Group’s favourable market position, supported by a well-established brand and long history in the financial services industry. Further supporting the ratings are continued strong capitalisation levels, good liquidity metrics and a rebound in the 2023 financial performance, supported by the acquisition of Colfire,” it added.
CariCRIS further stated the ratings are also underpinned by a well-diversified earning asset portfolio with good asset quality and the AMBL Group’s robust governance structure. The ratings are tempered by sovereign concentration risk compounded by global economic uncertainty which could constrain the AMBL Group’s financial performance in the year ahead.
The rating agency analysed factors that could, individually or collectively, lead to an improvement in the ratings and/or outlook of ANSA Merchant Bank, which include:
• Improvement in the credit rating of the Government of T&T;
• Successful acquisitions over the next 12 to 15 months with a concomitant material improvement in any of its main segments’ market share and the AMBL Group’s overall financial performance; and
• Material improvement in the financial performance and position of ANSA McAL.
The rating agency also looked at factors that could, individually or collectively, lead to a lowering of the ratings and/or outlook include:
• Two years of sustained losses;
• A greater than 20 per cent increase in insurance service expense and/or a more than 50 per cent fall in net interest income (NII) thus negatively impacting profitability;
• Downgrade in the rating of the Government of Trinidad and Tobago; and
• Material deterioration in the financial performance and position of ANSA McAL.
CariCRIS noted that as at December 2023, ANSA Merchant Bank is the parent company of nine subsidiaries in 3 countries: T&T, Barbados, and St Lucia. The group’s range of products and services are offered through four main segments which comprise general insurance services, life insurance services, banking services and investments.
ANSA Merchant’s largest segment is general insurance which accounted for approximately 67.8 per cent of the company’s total revenue in 2023, followed by banking services (20.9 per cent) and life insurance (10.2 per cent).