OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating of B++ (Good) and issuer credit rating of “bbb+” of La Colonial, S.A. Compañia de Seguros, S.A. (La Colonial) (Santo Domingo, Dominican Republic). The outlook for both ratings is stable.
The ratings reflect La Colonial’s solid capitalization, historically favorable operating profitability and its well-established market presence as one of the leading insurance providers in the Dominican Republic market. These positive rating factors are attributable to management’s commitment to effective control systems and focus on operating results. La Colonial’s financial strength is further enhanced by its comprehensive reinsurance program and strong liquidity and solvency metrics.
La Colonial has shown disciplined underwriting in a highly competitive market, while its risk-based capitalization remains fully supportive of its current ratings and outlook. La Colonial’s profitability is complemented by consistent levels of investment income, which have enabled it to steadily increase its surplus while still providing La Colonial with dividend payments.
Partially offsetting these positive rating factors are La Colonial’s limited financial flexibility, geographic concentration of its business exclusively in the Dominican Republic and losses stemming from its property/casualty book of business. La Colonial’s business concentration makes it vulnerable to regulatory, economic and political influences and volatility. Moreover, La Colonial will remain challenged to increase its market share while generating consistent earnings in a very competitive and maturing market. Also, the frequency of catastrophic events in the Caribbean presents a substantial level of risk exposure to La Colonial as it formalizes its risk management program.
Potential positive rating triggers would include sustained improvement in La Colonial’s underwriting results in conjunction with tangible improvements in the Dominican Republic’s regulatory environment and other country risk metrics. Possible negative rating triggers include deterioration in the company’s underwriting results, and consequently, a decline in its risk-based capitalization.
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The methodology used in determining these ratings is 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. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
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