JMMB Group Limited

CariCRIS reaffirms overall ‘good creditworthiness’ ratings to JMMB Group Limited

RATING DRIVERS

Supporting Factors

Strong brand and long history in the Jamaican securities industry and an emerging financial services player in the Caribbean region
Well-diversified asset portfolio with good asset quality
Strong financial performance in FY2021 bolstered by the Group’s investment in SFC
Comfortable capitalization, reflected in good capital adequacy ratios
Robust governance structure and risk management practices

Constraining Factors

Funding base characterized by moderate concentration in repurchase agreement (repo) instruments which has contributed to asset/liability mismatches and high gearing
Sluggish economic conditions could constrain growth

Rating Sensitivity Factors

Factors that could, individually, or collectively lead to an improvement in the ratings and/or Outlook include:

Improvement in the Government of Jamaica’s (GOJ) credit rating, leading to an improved overall credit risk profile of the GOJ
Growth in PAT of 10% for 2 consecutive years
Material improvements in the Group’s market share in its key business segments

Factors that could, individually, or collectively lead to a lowering of the ratings and/or Outlook include:

Deterioration of the NPLs to Gross loans ratio to 8% or more
Deterioration of the CAR of any of the Group’s subsidiaries to below the country specific regulatory requirements
Cost to Income ratio weakens to 75% and over

COMPANY BACKGROUND

JMMB Group Limited (JMMBGL or the Group) is a financial services Group incorporated and domiciled in Jamaica and listed on the Stock Exchanges of Jamaica and Trinidad and Tobago. The Group was initially established as Jamaica Money Market Brokers Limited (JMMB) in 1992 as a joint venture among the National Development Bank, Mutual Security Bank, Jamaica Producers Group Limited, Jamaica Venture Fund and Antrim Limited. JMMB has been a pioneer in the Jamaican securities industry as the first exclusive money market broker and dealer. Over the ensuing years, the Group’s operations have expanded and evolved to include 19 subsidiaries and 1 associated company in Jamaica, Trinidad and Tobago (T&T) and the Dominican Republic (Chart 1). In April 2015, a holding company, JMMBGL was formed, under an approved Scheme of Arrangement, as the parent of the Group of companies including JMMB. As at June 2021, JMMBGL’s 2 largest shareholders were Proven Investments Limited^[1] (20.01%) and Trustees JMMB ESOP (9.34%).

The Group offers its products and services through 5 main business lines which include investment management^[2], banking, insurance brokerage, remittances, and other related services, to 386,000 clients^[3] in the 3 countries that it serves. JMMBGL’s total assets as at March 2021 stood at J $506.2 billion^[4] and total revenue for the period ended March 2021 was J $22.6 billion. The Group’s largest subsidiary, Jamaica Money Market Brokers Limited domiciled in Jamaica, accounted for approximately 48% and 42%^[5] of JMMBGL’s total assets and revenue respectively. Over the past 8 years, the Group has focused on regional expansion and diversification of its business lines through acquisitions and the development of strategic partnerships. JMMBGL, over the next 5 years, will seek to standardise, centralise and integrate its operations across all entities within the Group, which will serve to improve its operational efficiency. Further, the Group also intends to grow its banking business line regionally with a view to enhancing the diversification of its income and reducing the cost of its funding.

^[1] Proven Investments Limited is a public investment firm. The Company’s primary activities include the holding of tradeable securities for investment purposes and holding private equity investments in small and medium sized companies throughout the region with significant potential for medium term growth.

^[2] Investment management includes asset management services i.e. on and off-balance sheet solutions, treasury, cambio, fixed income and equities trading and capital market services. On-balance sheet solutions include mutual funds and off-balance sheet solutions include collective investment schemes, pension funds and unit trusts.

^[3] As at March 2021

^[4] Total assets have been adjusted to exclude intangible assets, unrealized gains/(losses) and contingencies.

^[5] On a consolidated basis.

Analytical Contacts:

Kathryn Budhooram

Tel: 1-868-627-8879 Ext. 227

E-mail: kbudhooram@caricris.com

Keith Hamlet

Tel: 1-868-627-8879 Ext. 244

E-mail: khamlet@caricris.com

Website: www.caricris.com

E-mail: info@caricris.com

Disclaimer: CariCRIS has taken due care and caution in compilation of data for this product. Information has been obtained by CariCRIS from sources which it considers reliable. However, CariCRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. No part of this report may be published / reproduced in any form without CariCRIS’ prior written approval. CariCRIS is also not responsible for any errors in transmission and especially states that it has no financial liability whatsoever to the subscribers/ users/ transmitters/ distributors of this product.

TRINRE Insurance Company Limited

RATING DRIVERS

Supporting Factors

Healthy capitalization and good liquidity, supported by low risk retention
Continued profitable operations in FY2021
Moderately diverse investment portfolio with good asset quality
Good operational efficiency and adequate risk management measures support operations

Constraining Factors

Performance of the Trinidad & Tobago economy may impact TRINRE’s profitability

Rating Sensitivity Factors

Factors that could, individually, or collectively lead to an improvement in the ratings and/ or Outlook include:

An improvement in financial performance over 10% in the next year
Further diversification of revenue sources contributing to additional income
An improvement in the ratings assigned to the T&T sovereign

Factors that could, individually, or collectively lead to a lowering of the ratings and/ or Outlook include:

A deterioration of the Company’s capital adequacy ratio to 150% or lower on a sustained basis for at least 6 months under normal conditions
A lowering of the ratings assigned to the T&T sovereign
A lowering of the ratings of one of TRINRE’s main reinsurers

COMPANY BACKGROUND

Reinsurance Company of Trinidad and Tobago Limited was incorporated on July 3, 1975 by the Government of the Republic of Trinidad and Tobago (GORTT) which owned 60% of the Company and the remaining 40% held by various local insurance companies. In 2001, Investment Managers Limited (IML), a private investment holding company, acquired the majority shareholding of Reinsurance Company of Trinidad and Tobago and in 2015, changed its name to TRINRE Insurance Company Limited (TRINRE or the Company).

Currently, TRINRE offers a range of general insurance products and services that provide both individual and institutional coverage for: Motor, Property, Marine, Public/Product Liability, Engineering, Energy, Events, SMB^[1] and Workmen’s Compensation. The Company also offers a range of Group Life insurance products for Employers and Lending Institutions. Additionally, the Company offers a range of Bonds to provide financial security for project contracts. These products and services are offered through its branch network of five outlets^[2], agencies and brokers.

In February 2020, the Company obtained a license to operate an insurance company in Guyana, through its wholly owned subsidiary, Premier Insurance Company Limited (Premier). Premier commenced operations in January 2021 with a view to providing insurance and financial support to clients as Guyana continues to establish itself as an emerging global business destination.

^[1] Small and Medium Businesses: Retailers, Professional Offices, Trade & Service Companies and Hospitality businesses.

^[2] Head Office at Edward Street, Port of Spain, other outlets are located at: San Fernando, Arima, Chaguanas and Tobago.

Analytical Contacts:

Keith Hamlet

Tel: 1-868-627-8879 Ext. 229

E-mail: khamlet@caricris.com

Maxwell Gooding

Tel: 1-868-627-8879 Ext. 229

E-mail: mgooding@caricris.com

Website: www.caricris.com

E-mail: info@caricris.com

Disclaimer: CariCRIS has taken due care and caution in compilation of data for this product. Information has been obtained by CariCRIS from sources which it considers reliable. However, CariCRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. No part of this report may be published / reproduced in any form without CariCRIS’ prior written approval. CariCRIS is also not responsible for any errors in transmission and especially states that it has no financial liability whatsoever to the subscribers/ users/ transmitters/ distributors of this product.

TRINRE Insurance Company Limited

CariCRIS upgrades its credit ratings for TRINRE Insurance Company Limited

RATING DRIVERS

Supporting Factors

Strong market position as a leading plastic bottle manufacturer in Jamaica
Good operating efficiency underpinned by strong asset maintenance policies and practices

Constraining Factors

Deteriorating financial performance
High intercompany balances have limited cash flow accumulation
Downside risks associated with significant sovereign risk exposure to Jamaica
Increasing trend to limit the use of single-use plastic bottles represents an industry risk

Rating Sensitivity Factors

Factors that could, individually, or collectively lead to an improvement in the ratings and/ or Outlook include:

An increase in PAT of above 10% for 2 consecutive years
Improvement of the sovereign risk profile of Jamaica
2 consecutive years or net reductions in intercompany balances by 10% or more, leading to improved cash flows and cash balances for Poly Pet

Factors that could, individually, or collectively lead to a lowering of the ratings and/ or Outlook include:

A greater than 10% decline in operating revenue for 2 consecutive years
A decline in interest cover to below 2 times
A net increase in intercompany balances by 5% over the next 12 months
A deterioration in the Company’s debt/ TNW ratio to more than 2 times
Breach of covenants stipulated in the final term sheet/prospectus for the bond offering
Inability to raise capital given the likelihood that the bond’s principal at maturity would need to be refinanced in 2025
Changes in environmental laws and regulations towards reducing plastic use in Jamaica
Deterioration in the sovereign risk profile of Jamaica
Material deviation of Poly Pet’s audited financial accounts for June 2020 from management accounts presented, resulting in lower profitability and cash flow adequacy metrics

COMPANY BACKGROUND

Poly Pet Company Limited (Poly Pet or the Company) is privately-owned, limited liability, manufacturing company founded in 2006 and located in Kingston, Jamaica. The Company’s primary manufacturing operations involve the production of high-density polyethylene (HDPE)^[1] and polyethylene terephthalate (PET)^[2] bottles of various sizes for household, beverage, and industrial use. The Company is owned by Anthony Brown (40%), Shane Brown (40%) (the current Chief Executive Officer), and Tamara Phang (20%).

The Company holds a market share of approximately 70% of the plastic bottle manufacturing industry in Jamaica. Over 90% of the Company’s customers are located across Jamaica, with a small distribution operation located in Barbados. Additionally, Poly Pet has successfully aligned itself with both local and international companies to provide complete packaging solutions including labels, boxes, and bottle caps. The Company is able also to design and manufacture bottles for its customers based on their unique specifications.

In December 2020, the Company issued a 5-year J $1 billion senior secured bond. To date, the Company has received J $800 million from investors. The initial proceeds of the bond were mainly used to refinance its bank debt under more flexible terms and to fund additional Working Capital requirements (Table 1). The balance of J $200 million is expected to be sold to additional investors in the 2^nd half of 2021 and will be used to purchase new machinery and equipment to expand the Company’s product range and provide further working capital support.

Analytical Contacts:

Keith Hamlet

Tel: 1-868-627-8879 Ext. 229

E-mail: khamlet@caricris.com

Maxwell Gooding

Tel: 1-868-627-8879 Ext. 229

E-mail: mgooding@caricris.com

Website: www.caricris.com

E-mail: info@caricris.com

Poly Pet Company Limited

CariCRIS downgrades its credit ratings for Poly Pet Company Limited

RATING DRIVERS

Supporting Factors

Dominant presence in the Jamaican financial services sector
Sustained profitability notwithstanding lowered revenue and deterioration in asset quality due to the effects of COVID-19
Funding base characterized by continued growth and low cost
Comfortable capitalization reflected in good coverage of total assets
Sound risk management practices continue to support strategic objectives

Constraining Factors

High reliance on the performance of the Jamaican economy

Rating Sensitivity Factors

Factors that could, individually or collectively, lead to an improvement in the ratings and/or outlook include:

Improvement in the GOJ’s credit rating leading to an improved credit risk profile of NCBJ

Factors that could, individually or collectively, lead to a lowering of the ratings and/or outlook include:

The occurrence of any factors that may contribute to the deterioration of the CAR below the 12.5% minimum requirement for the Bank
The deterioration of the gross NPLs to gross loans ratio to 7.5% or more leading to reduced earnings and increased provisioning, thereby affecting profitability

COMPANY BACKGROUND

Established in 1837, the Colonial Bank of London was renamed the National Commercial Bank Jamaica Limited (NCBJ or the Bank) in 1977. NCBJ has 8 active subsidiaries that operate in the commercial banking and securities industries. The Bank offers an extensive product and service range including commercial banking, stock brokerage, wealth & asset management, and pension fund management & administration.

In March 2017, NCBJ and its subsidiaries completed its corporate restructuring forming a holding company called NCB Financial Group Limited (NCBFG or the Group). This re-organisation created a corporate structure that better facilitates the Group’s regional aspiration of becoming a leading financial services conglomerate in the Caribbean. As a result of the new structure, NCBJ is now a wholly-owned subsidiary of NCBFG. NCBFG is majority-owned by AIC (Barbados) Limited (51.73% as at June 2021).

In September 2020, NCBJ disposed of 100% of the insurance and annuities portfolio of NCB Insurance Company Limited (NCBIC), its last remaining subsidiary in the insurance industry, which was acquired by Guardian Holdings Limited (GHL), a subsidiary of NCBFG. The execution of this transaction allows NCBFG to streamline its insurance business segment and extract synergies and efficiencies where possible.

Analytical Contacts:

Megan Dass

Tel: 1-868-627-8879 Ext. 239

E-mail: mdass@caricris.com

Keith Hamlet

Tel: 1-868-627-8879 Ext. 244

Cell: 1-868-487-8356

E-mail: khamlet@caricris.com

Website: www.caricris.com

E-mail: info@caricris.com

National Commercial Bank Jamaica Limited (NCBJ)

CariCRIS reaffirms “good” creditworthiness ratings for National Commercial Bank Jamaica Limited

RATING DRIVERS

Supporting Factors

Dominant regional financial services player, with strong presence in the Jamaica banking and securities industry and regional insurance industry
Comfortable capitalization reflected in good coverage of total assets
Sustained financial performance underpinned by diverse and resilient income streams
Growing assets base, though challenged by some deterioration in asset quality
Robust risk infrastructure and focus on technology supports strategic planning and the achievement of business objectives

Constraining Factors

Deteriorating economic conditions in operating territories could constrain growth

Factors that could, individually or collectively, lead to an improvement in the ratings and/or outlook include:

Improvement in the credit ratings of the Government of Jamaica (GoJ) and/or the Government of the Republic of Trinidad and Tobago (GoRTT) leading to an improved sovereign risk profile

Factors that could, individually or collectively, lead to a lowering of the ratings and/or outlook include:

Deterioration of any of the subsidiaries’ CAR below the country specific regulatory requirements
Deterioration in the credit ratings of the Government of Jamaica (GoJ) and/or the Government of the Republic of Trinidad and Tobago (GoRTT) leading to a worsened sovereign risk profile

COMPANY BACKGROUND

NCB Financial Group Limited (NCBFG or the Group), was incorporated in April 2016 and is a financial holding company for National Commercial Bank Jamaica Limited (NCBJ or the Bank) and to facilitate the Group’s regional expansion initiatives. NCBFG currently comprises NCBJ and NCB Global Holdings (NCBGH) Limited as two wholly owned subsidiaries, as well as Clarien Group, a Bermuda-based banking, investment, and trust services financial group. NCBFG acquired 50.1% of Clarien in December 2017^[1] and its subsidiary, NCBGH, acquired the majority shareholding (61.77%) of Guardian Holdings Limited (GHL or the Guardian Group) and its subsidiaries.

NCBFG is listed on the Jamaica and Trinidad and Tobago stock exchanges and its top 3 shareholders as at August 31, 2021 are AIC (Barbados) Limited (52.11%), MF&G Asset Management (5.05%) and Sagicor PIF Equity Fund (3.21%). The remaining 41.9% of the shares are distributed amongst other individual and institutional shareholders. NCBJ, the main operating subsidiary, currently has 8 subsidiaries that operate in the commercial banking and securities industries. The Bank offers an extensive range of products and services including commercial banking, stock brokerage, wealth and asset management, and pension fund management and administration.

^[1] The other shareholders of Clarien include Edmund Gibbons Limited and Portland Private Equity Limited (PPE)

Analytical Contacts:

Khadine Tavares

Tel: 1-876-618-8800 Ext. 9813

E-mail: ktavares@caricris.com

Keith Hamlet

Tel: 1-868-627-8879 Ext. 229

E-mail: khamlet@caricris.com

Website: www.caricris.com

Email: info@caricris.com