A.M. Best Revises Outlook to Negative of Colina Insurance Limited

OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best Co. has revised the outlook to negative from stable and affirmed the financial strength rating of A- (Excellent) and issuer credit rating of “a-” of Colina Insurance Limited (Colina) (Nassau, Bahamas). Colina is a wholly owned subsidiary of its publicly traded parent, Colina Holdings Bahamas Limited (CHBL) [BISX: CHL], which is majority owned by AF Holdings Ltd. (AFH).

“Risk Management and the Rating Process for Insurance Companies”

The revised outlook reflects A.M. Best’s concerns regarding the risks associated with Colina’s high concentration in real-estate investments relative to the total equity of the company and the continued delinquencies in its mortgage loan portfolio that are attributable to the current weak economic environment in the Bahamas. A.M. Best notes that Colina’s overall mortgage delinquency exposure relative to its consolidated stockholders’ equity remains high, although somewhat improved in 2010 from prior years. While the company’s earnings performance has improved in recent years, A.M. Best believes that Colina could face operating challenges in its core life/health insurance due to the weak economy in the Bahamas.

Colina maintains a leading market share in the life/health market in the Bahamas and sustains good risk-adjusted capitalization and conservative reserving practices. As a life/health market leader, Colina continues to leverage its competitive advantages by expanding within the islands of the Bahamas.

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”; and “Assessing Country Risk.” Methodologies can be found at www.ambest.com/ratings/methodology.

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