The Tribune

By YOURI KEMP

Tribune Business Reporter

The Bahamas' two major life and health insurers were yesterday removed from "review" by the industry's major rating agency despite suffering increased claims and policy lapses due to Hurricane Dorian.

AM Best, in two separate releases, confirmed it has lifted the additional scrutiny applied to both BISX-listed underwriters following the category five storm and reaffirmed their existing "financial strength".

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-'. AM Best also reaffirmed the same ratings for Family Guardian and its parent, FamGuard Corporation, removing both insurers from "review with developing implications" due to Dorian's financial and economic impact.

Also giving the duo a "stable" outlook, AM Best said that less than 20 percent and 15 percent, respectively, of Colina's and Family Guardian's policyholders were based in the Dorian-ravaged islands.

"The ratings reflect Colina's balance sheet strength, which AM Best categorises as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM)," it added of Colina.

"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."

Delivering a similar verdict on Family Guardian, AM Best said: "While there was disruption to the company's distribution, increased benefits and increases in policy lapses, the overall financial impact was limited.

"The most severe devastation of the storm occurred in the northern islands of Abaco and Grand Bahama where less than 15 percent of the company's policyholders are located. The island of New Providence, where most of the population and businesses are located, was largely spared."

The rating agency added: "The balance sheet strength assessment reflects the very strong level of risk-adjusted capital, the absence of leverage and good liquidity partly offset by the company's limited investment options and high concentration of sovereign debt holdings.

"The company's mortgage loan portfolio had very limited impact due to the relatively 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 to support capital growth in the near term. The business profile assessment considers Family Guardian's good market position 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."