OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb+” (Good) of Colina Insurance Limited (Colina). In addition, AM Best has affirmed the Long-Term ICR of “bb+” (Fair) of Colina Holdings Bahamas Limited (CHBL). Both companies are domiciled in Nassau, Bahamas. The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Colina’s balance sheet strength, which AM Best assesses as strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).
Due to exchange control limitations, Colina has very limited investment options to optimize asset-liability matching, other than the Bahamas’ sovereign debt instruments, resulting in a high concentration of these holdings on Colina’s balance sheet. As a result, following the 2022 downgrades of the Bahamas’ sovereign debt ratings, Colina’s balance sheet strength assessment reflects a very weak level of risk-adjusted capital, as measured by Best’s Capital Adequacy Ratio (BCAR). These factors are offset by good liquidity and increasing regulatory and absolute capital levels. The company’s operating performance continues to be assessed as strong, with consistently positive operating earnings and minimal impact to operating earnings resulting from external events (e.g., COVID-19, weather-related events, downgrade of Bahamian debt) in recent years.
Colina’s business profile assessment is bolstered by its position as a market leader in the Bahamas and its low product risk liability offerings, but these are offset by its geographic concentration in the Bahamas. The company’s ERM framework and governance structure are appropriate for its risk profile.
Concerns remain regarding the continued impact from global economic conditions over the past few years on the Bahamas. AM Best will continue to monitor the economic conditions in the Bahamas and will take appropriate rating actions as they change.
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