OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of “a-” to Colonial Insurance (BVI) Limited (Colonial Insurance BVI) (British Virgin Islands), a subsidiary of Colonial Group International Limited (Colonial Group). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect Colonial Insurance BVI’s reliance on the management, operational and reinsurance support provided by Colonial Group and its other affiliates. Colonial Insurance BVI provides medical, property and auto insurance products in the British Virgin Islands. The company’s book of business grew substantially from 2011 to 2015 driven primarily by expanding medical premiums. Colonial Insurance BVI relies on Colonial Group’s expertise to price, underwrite and service its products. While over 90% of premium is ceded to Colonial Group Bermuda affiliates, Colonial Insurance BVI’s operating results have been supported by reinsurance commissions, as the underwriting results of ceded business have remained positive.
Offsetting rating factors are premium decline in 2016 and limited growth potential due to geographic limitations. During 2016, Colonial Insurance BVI’s medical premium dropped significantly following the loss of a large group customer and the introduction of the National Health Plan in the British Virgin Islands. The company expects the lower premium level to continue in 2017 but to recover partially in 2018.
A.M. Best deviated from its “Rating Members of Insurance Groups” criteria report, as full rating enhancement was afforded to Colonial Insurance BVI from Colonial Group. As prescribed by the criteria, to be eligible for rating enhancement, an individual company must operate under common ownership (greater than 50%), with the entity providing lift or maintaining board control together with common management. In this case, Colonial Insurance BVI is not majority owned by Colonial Group but rather is equally owned by Colonial Group and the consortium of local investors. The rating enhancement is supported by full management and operational control by Colonial Group over Colonial Insurance BVI, as well as reinsurance support and a long-term history of productive relationships between Colonial Group and local investors in governing Colonial Insurance BVI.
This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all 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 A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.
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