NOVEMBER 06, 2019 11:07:53 Eastern Standard Time
AM Best Removes From Under Review With Developing Implications and Affirms Credit Ratings of Colonial Group Intl. Ltd.'s Members
FOR IMMEDIATE RELEASE
OLDWICK - NOVEMBER 06, 2019 11:07:53 Eastern Standard Time
The ratings reflect Colonial Group’s balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
Colonial Group’s primary operating market is Bermuda, where it has strong brand recognition and competes for business among the top insurance writers on the island. However, the operating disruption of the organization’s Bahamian business and the catastrophic damages caused by Hurricane Dorian prompted an AM Best response to place the (P/C) companies and Colonial Group under review with developing implications, along with other market participants with businesses domiciled in the Bahamas. AM Best has since evaluated the loss estimates and related reinsurance contracts of Security and General Insurance Company Limited, the Colonial Group entity primarily affected by the storm damage. The financial exposure to Colonial Group is within its current reinsurance contracts, and the net impact to the organization is anticipated to be minimal.
The earnings of Colonial Group have been subject to fluctuations over the past five years, where the primary driver of losses has been from its property business, and its health business has added stability. AM Best has factored into the ratings this stability, but notes the potential disruption from health reform in the Bermuda jurisdiction may result in pressure to garner earnings should further revisions to the nation’s health reform affect the competitive health insurance market landscape. AM Best also notes that the Colonial Group of companies has diversified sources of earnings from non-Bermudian operations that include the Cayman Islands, Bahamas and Southern Caribbean jurisdictions through its minority ownership of The Beacon Insurance Company Limited, a Trinidad and Tobago-based company expected to add business through its seven licenses in that region. It is expected that the company will expand its product offerings of medical, dental, life, long-term disability and accident, death and dismemberment coverage in these jurisdictions. The strength of the Colonial Group ratings is driven by its strongest balance sheet measures and specifically its strongest risk-adjusted capital measurement, which may allow the group to withstand future earnings instability over the medium term.
The FSR of A (Excellent) and the Long-Term ICRs of “a” have been removed from under review with developing implications and affirmed, with assigned outlooks of stable, for the following L/H and P/C operating subsidiaries of Colonial Group International Limited:
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