A.M. Best Affirms Credit Ratings of La Colonial, S.A. Compañía de Seguros
The ratings reflect the good execution of its strategy, consistently with improvements in La Colonial’s underwriting and expense management, and robust risk-adjusted capitalization supported by a strong reinsurance program. Partially offsetting these positive rating factors are the company’s high operational expenses and its dependence on investment income.
La Colonial is the fourth largest insurance company in the
During 2016, the company increased its retention and strengthened its underwriting strategy, resulting in an improved loss ratio and better efficiency. However, its combined ratio, while improved, has not yet reached premium sufficiency and overall net results are still dependent of investment income.
La Colonial’s risk-adjusted capitalization remains strong and is adequately supported by a comprehensive reinsurance program that mitigates the potential impact from regional natural disasters on the company’s results. These characteristics are well reflected in its solvency and capitalization metrics and its excellent market position. La Colonial’s dependence on investment income has diminished in the past few years, but remains a key factor for achieving positive bottom line results.
Positive rating actions could occur if the company continues to improve its underwriting performance, by achieving greater efficiency and reducing its dependency on investment income, while at the same time strengthening its capital base through increased profitability. Factors that might lead to negative rating actions include deterioration of its technical income, either by higher operational costs or a decline in the underwriting quality that places more emphasis on financial income to sustain profitability. Any major changes in La Colonial’s capital base, including significant dividends or capital outflows, that diminish A.M. Best’s view of the company’s risk-adjusted capitalization also could result in negative rating actions.
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. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Key insurance criteria reports utilized:
- Catastrophe Analysis in A.M. Best Ratings (
Nov. 3, 2011 ) - Evaluating Country Risk (
May 2, 2012 ) - Risk Management and the Rating Process for Insurance Companies (
April 2, 2013 ) - Understanding Universal BCAR (
May 1, 2017 )
View a general description of the policies and procedures used to determine credit ratings. For information on the meaning of ratings, structure, voting and the committee process for determining the ratings and monitoring activities, please refer to Understanding Best’s Credit Ratings.
- Previous Rating Date:
April 26, 2016 - Date of Financial Data Used:
Dec. 31, 2016
This press release relates to rating(s) that have been published on
While the information obtained from the material source(s) is believed to be reliable, its accuracy is not guaranteed.
A.M. Best’s credit ratings are independent and objective opinions, not statements of fact.
Copyright © 2017 by A.M. Best Rating Services, Inc. and/or its subsidiaries. ALL RIGHTS RESERVED.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170524006120/en/
Elí Sánchez
Senior Financial Analyst
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or
Director, Analytics
+52 55 1102 2720, ext. 107
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Manager, Public Relations
+1 908 439 2200, ext. 5159
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Director, Public Relations
+1 908 439 2200, ext. 5644
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