MarketWatch - Business Wire
Friday, May 11, 2012
Friday, May 11, 2012
OLDWICK, N.J., May 10, 2012 (BUSINESS WIRE) — A.M. Best Co. has 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). Concurrently, A.M. Best assigned an issuer credit rating of “bbb-” to CHBL. The outlook for all ratings is negative.
The rating affirmations for Colina reflect its leading position in the life/health market in The Bahamas, good risk-adjusted capitalization, profitable operations, albeit reduced from earlier levels, 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 maintenance of the negative 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. While the company’s earnings performance remains positive, the depressed economic environment also has had an effect on its core life/health insurance lines.
Key rating factors for Colina returning to a stable outlook include improvement in its operating results, decreases in delinquency rates on its mortgage loan portfolio, continued growth and profitability in its core business lines and an overall improvement in the Bahamian economy. Key rating factors that may result in a negative rating action for Colina include further deterioration of operating results, continued weakness in its mortgage loan portfolio, further near-term reductions in interest rates and an overall deterioration of the Bahamian economic environment.