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Best’s News & Research Service - June 25, 2019 01:52 PM (EDT)

AM Best Affirms Credit Ratings for La Colonial, S.A. Compañía de Seguros

  • June 25, 2019 01:52 PM (EDT)
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Mexico City //BestWire// - AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” of La Colonial, S.A. Compañía de Seguros (La Colonial) (Santo Domingo, Dominican Republic). The outlook of these Credit Ratings (ratings) remains positive.

The ratings reflect La Colonial’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.

The positive outlooks recognize the improvements made by La Colonial in terms of operating performance and acknowledge the skills of the underwriting team to face the potential challenges of harsher competition during 2019. The ratings also reflect the company’s robust risk-adjusted capitalization, supported by a strong reinsurance program. Partially offsetting these positive rating factors is the competitive environment in the Dominican Republic.

La Colonial is the fifth-largest insurance company in the Dominican Republic, with a 7.3% market share as of April 2019, maintaining a leading position in the Dominican Republic despite changing market dynamics, including the continuous inflow of new health premiums to the system from new competitors. The company has posted adequate profitability and growth to support its results. The company operates as a multiline insurer, and its portfolio is composed of 80% property/casualty, 16% accidents and health and 4% life, based on gross written premium.

In 2018, the company continued its improved combined ratio to levels below 100% because of higher retention and a continuation of expense efficiency. A key year for the resolution of the positive outlooks is 2019, as the company needs to consolidate the improvements achieved in terms of operating performance amidst increased competition in key segments like auto and fire. In this regard, AM Best considers La Colonial’s management team to be well-prepared to manage such competition and to maintain a cost-efficient operation.

La Colonial’s risk-adjusted capitalization remains strong and is supported adequately by a comprehensive reinsurance program that mitigates the potential impact from regional natural disasters on the company’s results. These characteristics are well-reflected in its solvency and capitalization metrics, and its excellent market position. Looking forward, AM Best expects the company to continue performing with premium sufficiency driven by lower technical costs in the medium term, to achieve higher ratings.

Positive rating actions could occur if La Colonial continues to improve its underwriting performance, by achieving greater efficiency and consolidating its positive trend in operating performance, while at the same time, strengthening its capital base through increased profitability. Factors that might lead to negative rating actions include deterioration of its technical income, by either higher operational costs or a decline in the underwriting quality that places more emphasis on financial income to sustain profitability. Any major changes in La Colonial’s capital base, including significant dividends or capital outflows, that diminish AM Best’s view of the company’s risk-adjusted capitalization also could result in negative rating actions.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of AM Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Key insurance criteria reports utilized:


  • Evaluating Country Risk (Version Oct. 13, 2017)

  • Understanding Universal BCAR (Version May 23, 2019)

  • Catastrophe Analysis in A.M. Best Ratings (Version Oct. 13, 2017)

  • Available Capital & Holding Company Analysis (Version Oct. 13, 2017)

View a general description of the policies and procedures used to determine credit ratings. For information on the meaning of ratings, structure, voting and the committee process for determining the ratings and monitoring activities, please refer to Understanding Best’s Credit Ratings.


  • Previous Rating Date: May 16, 2018

  • Date Range of Financial Data Used: Dec. 31, 2014 - April 30, 2019

This press release relates to rating(s) that have been published on AM Best’s website. For additional rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page.

AM Best does not validate or certify the information provided by the client in order to issue a credit rating.

While the information obtained from the material source(s) is believed to be reliable, its accuracy is not guaranteed. AM Best does not audit the company’s financial records or statements, or otherwise independently verify the accuracy and reliability of the information; therefore, AM Best cannot attest as to the accuracy of the information provided.

AM Best’s credit ratings are independent and objective opinions, not statements of fact. AM Best is not an Investment Advisor, does not offer investment advice of any kind, nor does the company or its Ratings Analysts offer any form of structuring or financial advice. AM Best’s credit opinions are not recommendations to buy, sell or hold securities, or to make any other investment decisions. View our entire notice for complete details.

AM Best receives compensation for interactive rating services provided to organizations that it rates. AM Best may also receive compensation from rated entities for non-rating related services or products offered by AM Best. AM Best does not offer consulting or advisory services. For more information regarding AM Best’s rating process, including handling of confidential (non-public) information, independence, and avoidance of conflicts of interest, please read the AM Best Code of Conduct. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global rating agency and information provider with a unique focus on the insurance industry.



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