A.M. Best Revises Outlooks to Positive for La Colonial, S.A. Compañía de Seguros
The Credit Ratings (ratings) reflect La Colonial’s balance sheet strength, which
The positive outlooks recognize the improvements made by La Colonial in terms of operating performance and acknowledge the good execution of its strategy. The ratings also reflect the company’s robust risk-adjusted capitalization supported by a strong reinsurance program. Partially offsetting these positive rating factors is the competitive environment in the
La Colonial is the fifth-largest insurance company in the
In 2017, the company improved its combined ratio to levels below 100% as a result of changes in reserves in the auto segment and a continuation of expense efficiency. 2018 could prove to be a year of increased competition in the Dominican market as lower reserve requirements could drive price competition in the auto segment. In this regard,
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 and remains a key factor for strengthening positive bottom line results. Looking forward,
Positive rating actions could occur if the company continues to improve its underwriting performance, by achieving greater efficiency and consolidating its positive trend in operating performance, 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:
- Evaluating Country Risk (Version
Oct. 13, 2017 ) - Understanding Universal BCAR (Version
Oct. 13, 2017 ) - Catastrophe Analysis in A.M. Best Ratings (Version
Oct. 13, 2017 ) - Available Capital & Holding Company Analysis (Version
Oct. 13, 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:
May 24, 2017 - Date of Financial Data Used:
Dec. 31, 2017
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 © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180516006199/en/
Elí Sánchez, +52 55 1102 2720, ext. 108
Senior Financial Analyst
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Manager, Public Relations
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Senior Director, Analytics
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Director, Public Relations
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