Colina Insurance Company yesterday said it was "particularly proud" that the industry's top rating agency had praised its strong balance sheet in the aftermath of Hurricane Dorian.
Catherine Williams, finance vice-president for the life and health insurer whose parent is listed on BISX, said: "AM Best provides us with a benchmark comparing Colina to our local and international peers.
"We are particularly proud that AM Best has categorised Colina's balance sheet strength as very strong, which confirms that we are suitably positioned to meet our contractual promises."
She spoke after AM Best removed Colina Insurance Company and its main competitor, Family Guardian, from the "review" they had been subjected to following the Category Five storm despite both suffering increased claims and policyholder lapses.
Following Hurricane Dorian's passage, AM Best placed the Credit Ratings of all the major property/casualty and life/health insurance companies domiciled in The Bahamas "under review with developing implications". A comprehensive analysis of Colina's financial strength and the storm's impact to the company has resulted in removal of the rating.
Colina Insurance Company and its listed parent, Colina Holdings (Bahamas), have thus maintained their A- (Excellent) financial strength rating and long-term issuer credit rating of 'a-'. It has also kept its "stable" outlook.
AM Best said less than 20 percent of Colina's policyholders were based in the Dorian-ravaged islands. "The ratings reflect Colina's balance sheet strength, which A. M. Best categorises as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM)," the rating agency said.
"These rating actions follow the company's comprehensive assessments of the financial impact to Colina following Hurricane Dorian. Immediately following the storm there was disruption to the company's distribution systems in the affected islands of Grand Bahama and Abaco.
"The company also experienced a number of claims attributable to the hurricane, as well as a small increase in policy lapses from policyholders resident in the affected islands. However, the overall financial impact was limited," the rating agency continued.
"The storm's most severe devastation occurred in the northern islands of Abaco and Grand Bahama where less than 20 percent of the company's policyholders are located. The island of New Providence, where most of the country's population and businesses are located, was largely spared."
Turning to Colina's balance sheet, AM Best said this demonstrated "the strongest level of risk-adjusted capital, the absence of leverage and good liquidity, which is partly offset by the company's limited investment options and high concentration of sovereign debt holdings".
The rating agency added: "The company's mortgage loan portfolio sustained very limited impact due to the low number of loans in the hardest hit areas and property insurance coverage requirements. Operating performance remains strong with minimal impact to operating earnings resulting from the storm.
"AM Best expects consistent positive net earnings to continue supporting capital growth in the near term. The business profile assessment considers Colina's position as a market leader in The Bahamas and creditworthy product offerings offset by its geographic concentration in The Bahamas. The company's ERM framework and governance structure are appropriate for its risk profile."