A.M. Best Affirms Ratings of Colina Insurance Limited and Colina Holdings Bahamas Limited

A.M. Best has affirmed the financial strength rating of A- (Excellent) and the issuer credit rating (ICR) of “a-” of Colina Insurance Limited (Colina). Concurrently, A.M. Best has affirmed the ICR of “bbb-” of Colina Holdings Bahamas Limited (CHBL) [BISX: CHL] (both domiciled in Nassau, Bahamas). Colina is a wholly owned subsidiary of its publicly traded parent, CHBL, and CHBL is majority owned by AF Holdings Ltd. (AFH). The outlook for all ratings is stable.

The rating affirmations for Colina reflect its leading position in the life/health market in The Bahamas, its adequate risk-adjusted capitalization, stabilized operating results and conservative reserving practices. As a life/health market leader, Colina has maintained its competitive advantages within The Bahamas.

While A.M. Best remains concerned with 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, the company has been able to reduce their concentration in such asset classes to a manageable level. While the company's earnings performance has improved, a prolonged deterioration in the local economic environment can create a negative effect on its core life/health insurance lines. In addition, the Bahamas government’s introduction of a new value added tax can put some near-term volatility in the execution of their business plan.

A rating upgrade is unlikely in the near term. Downward rating actions could result if a material deterioration were to occur in Colina’s operating results, worsening delinquency rates within the mortgage portfolio were recorded and/or a deterioration in the Bahamian economic environment takes place.

The methodology used in determining these ratings is A.M. 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. A.M. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

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