A.M. Best Affirms Ratings of La Colonial, S.A. Compañia de Seguros

OLDWICK, N.J. --(Business Wire)--

A.M. Best Co. has affirmed the financial strength rating of B++ (Good) and issuer credit rating of "bbb+" of La Colonial, S.A. Compañia de Seguros (La Colonial) (Santo Domingo, Dominican Republic). The outlook for both ratings is stable.

The ratings reflect La Colonial's profitable net results and more than adequate risk-based capitalization. La Colonial's consistent levels of positive investment income have resulted in historically favorable earnings that have enabled the company to continue to increase its level of surplus. 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 has enabled it to steadily appreciate surplus while still providing La Colonial with dividend payments.

Partially offsetting these positive rating factors is La Colonial's limited financial flexibility, geographic concentration of its business exclusively in the Dminican Republic and losses stemming from its property/casualty book of business. La Colonial's business concentration makes it vulnerable to regulatory, economic and political influence 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 regulatory environment and other country risk metrics. Possible negative rating triggers could include deterioration in the company's underwriting results, and consequently, a decline in its risk-based capitalization.

A.M. Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated in the United States and throughout the world.

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. Key criteria utilized include: "Risk Management and the Rating Process for Insurance Companies"; "Understanding Universal BCAR"; "Catastrophe Analysis in A.M. Best Ratings"; "Rating Members of Insurance Groups"; and "Evaluating Country Risk." Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.