A.M. Best Affirms Ratings of Colonial Group International Ltd’s Operating Subsidiaries

OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best Co. has affirmed the financial strength ratings (FSR) of A- (Excellent) and issuer credit ratings (ICR) of “a-” of the life/health and property/casualty operating subsidiaries of Colonial Group International Ltd (Colonial Group). The outlook for all ratings is stable. Colonial Group is a wholly owned intermediate holding company of Edmund Gibbons Limited, the ultimate parent company. All companies are domiciled in Bermuda, unless otherwise specified. (See below for a detailed listing of the companies and ratings.)

“Risk Management and the Rating Process for Insurance Companies”

The rating affirmations reflect the operating subsidiaries’ adequate risk-based capitalization, the consistent increase in total consolidated equity despite some unfavorable operating results in the most recent year, and their diversified business profiles, with the focus being on life/health and property/casualty markets in Bermuda, the Bahamas, Cayman Islands and the Caribbean.

Colonial Group’s life/health subsidiaries have reported unfavorable underwriting results in the most recent year with the exception of Colonial Life Assurance Company Limited, whose net underwriting losses narrowed in 2009 over 2008. Colonial Medical Insurance Company Limited and Atlantic Medical Insurance Limited (Bahamas) were negatively affected by unusually high cost claims experience triggered mostly by a weak economic environment. Both are regional companies with a continued strong presence in their respective health markets. On a net income basis, the life/health subsidiaries’ combined results were lower in 2009 from 2008 but remained positive due to an improvement in the financial markets.

Within the property/casualty operations, Colonial Group’s three operating subsidiaries have generally demonstrated good underwriting results, improved operating performance trends and continuing parental support. Furthermore, Colonial Group benefits from these subsidiaries’ reinsurance leverage to manage their property/casualty risks, while growing direct premium revenues in their core markets.

Partially offsetting these strengths are Colonial Group’s significant concentration risk in the volatile life/health lines of business in several geographic regions, vulnerability to frequency and severity of catastrophic events from the property/casualty risks within the markets it serves, large amounts of inter-company transactions and challenges in improving its health business profitability in the current economic environment.

The FSRs of A- (Excellent) and ICRs of “a-” have been affirmed for the following life/health and property/casualty operating subsidiaries of Colonial Group International Ltd:

• Colonial Medical Insurance Company Limited
• Atlantic Medical Insurance Limited
• Colonial Life Assurance Company Limited
• Colonial Insurance Company Limited
• British Caymanian Insurance Company Limited
• Security and General Insurance Company Limited

The principal methodology used in determining these ratings is Best’s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding Universal BCAR”; “Rating Members of Insurance Groups”; and “Assessing Country Risk.” Methodologies can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.