A.M. Best, the world's leading insurance rating and information source, has affirmed the financial strength rating of A- (Excellent) and issuer credit rating of A- of Colina Insurance Limited (Colina). The outlook for both ratings is stable.
According to A.M. Best, the rating affirmations reflect Colina's "leading market position in the Bahamian life and health insurance market, positive operating results recorded in recent periods, adequate risk-adjusted capitalization and conservative reserving practices". The ratings also consider Colina's ability to leverage its competitive advantages within The Bahamas. Colina has maintained a rating history of A- (Excellent) since it received its first A.M. Best rating in 2004.
According to A.M. Best's ratings methodology, the "A-"rating is assigned by A.M. Best only to insurance companies that it believes have an excellent ability to meet their ongoing insurance obligations.
"Operating in The Bahamas for many years, Colina enjoys leading market share in The Bahamas in its selected segments," said A.M. Best.
"By leveraging its competitive advantages, Colina continues to seek opportunities to develop both new geographical markets and grow organically to expand its distribution and improve economies of scale. A.M. Best expects a continuation of a normalized level of aggregate profitability based on 2014 performance."
A.M. Best also affirmed the "bbb-" issuer credit rating for the company's parent, Colina Holdings Bahamas Limited (CHBL) with a stable outlook, recognizing the company's normalized earnings profile and "demonstrated improving trends".
In the financial year ending December 31, 2014, CHBL reported continued positive results in key financial indicators, including a $27.9 million growth in its total asset base. By the second half of 2015, the company continued to build its asset base, increasing total assets by $14.8 million to $648.2 million, with total equity at $160.8 million.
"We are very pleased to have our A- (Excellent) rating affirmed once again, and with the continued overall performance of Colina," said CHBL Executive Vice Chairman Emanuel M. Alexiou. "A.M. Best's review of Colina confirms what we see each day - a strong company focused on its business and well prepared to meet the challenges of the economic and regulatory environment. It validates for our customers, sales representatives and employees that they can continue to rely on us."
The strengths highlighted by A.M. Best are partially offset by delinquencies in Colina's mortgage loan portfolio and a concentration in real estate investments relative to total stockholders' equity. The ratings agency, however, credits the company for strategically reducing real estate and mortgage assets over the last few years.
"We recognized that the mortgage market in The Bahamas was a challenging one, so we have focused on writing only quality mortgages and on collecting delinquencies. Just five years ago, Colina's mortgage book represented over 14 percent of its total invested assets and, in comparison, by June 2015, Colina's mortgage book had decreased to represent only eight percent of total invested assets." said Alexiou.
The methodology used in determining these ratings is A.M Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process.
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