AM Best Affirms Credit Ratings of Colonnade Insurance S.A.
December 09 2021 - 4:32PM
Business Wire
AM Best has affirmed the Financial Strength Rating of A-
(Excellent) and the Long-Term Issuer Credit Rating of “a-”
(Excellent) of Colonnade Insurance S.A. (Colonnade) (Luxembourg), a
member of the Fairfax Financial Holdings Limited (Fairfax) [TSX:
FFH] group of companies. The outlook of these Credit Ratings
(ratings) is stable.
The ratings reflect Colonnade’s balance sheet strength, which AM
Best categorizes as strong, as well as its adequate operating
performance, neutral business profile and appropriate enterprise
risk management (ERM).
Colonnade’s balance sheet strength benefits from the explicit
and implicit support provided by Fairfax. This support includes a
track record of maintaining capital in the form of contributions
and a legally binding guarantee and investment management services.
Fairfax’s commitment to Colonnade’s strong balance sheet assessment
was evident in multiple capital contributions over its operating
history, though in recent years, capital generation has been
through investment returns and profitable underwriting. Going
forward, AM Best expects that Colonnade will continue to support
its business needs through organic capital generation, as it
implements growth plans and continues to invest in company
infrastructure.
Colonnade’s premium volume grew rapidly from 2016 through 2018,
its first three years under Fairfax ownership, as a result of the
rollover of books of business previously written by the operations
of QBE Insurance Group Limited and American International Group,
Inc. The risk associated with Colonnade’s premium growth in its
first few years of operation was moderated by Colonnade’s high
retention level of management and the staff that wrote the business
under the former owners. The pace of growth moderated in 2019
through the third quarter of 2021, and there is an expectation of
more moderate growth going forward.
Colonnade’s adequate operating performance has been driven by
its favorable loss performance, which was offset by the initial
costs incurred in its developmental stage, with expenses outpacing
premium. This performance was in line with the company’s business
plan and it has steadily improved as startup costs have subsided.
Colonnade generated an underwriting profit in 2019, and continued
through 2020, albeit more modestly than the previous year due
largely to the economic effects of the COVID-19 pandemic. As the
more severe economic repercussions of the pandemic wore off in
2021, net income grew to 10.7 million euros at the end of the third
quarter, an increase over 7.9 million euros at year-end 2020.
The company’s neutral business profile reflects its
concentration in Central and Eastern Europe, with the three largest
countries—Poland, Hungary and the Czech
Republic—representing approximately 75% of the premium
written. Concentration risk is offset by the dispersion of the
remaining 25% of its business in three other central European
countries and Colonnade’s diverse product offering.
AM Best considers the company’s risk management capability to be
in line with its risk profile, and it is supported by the company’s
focus on maintaining geographic and by-line diversity of its
business, conservative reserving and per-risk reinsurance limits,
supporting the assessment of appropriate. The company benefits from
a comprehensive and well-documented ERM program and continues to
grow more independent in its risk management functions as it
matures, while continuing to benefit from the risk management
expertise of its ultimate parent.
This press release relates to Credit Ratings that have been
published on AM Best’s website. For all rating information relating
to the release and pertinent disclosures, including details of the
office responsible for issuing each of the individual ratings
referenced in this release, please see AM Best’s Recent Rating
Activity web page. For additional information regarding the use and
limitations of Credit Rating opinions, please view Guide to Best's
Credit Ratings. For information on the proper use of Best’s Credit
Ratings, Best’s Preliminary Credit Assessments and AM Best press
releases, please view Guide to Proper Use of Best’s Ratings &
Assessments.
AM Best is a global credit rating agency, news publisher and
data analytics provider specializing in the insurance industry.
Headquartered in the United States, the company does business in
over 100 countries with regional offices in London, Amsterdam,
Dubai, Hong Kong, Singapore and Mexico City. For more information,
visit www.ambest.com.
Copyright © 2021 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/20211209006058/en/
Christopher Pennings Financial Analyst +1 908
439 2200, ext. 5611 christopher.pennings@ambest.com
Christopher Sharkey Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com
Gregory Dickerson Associate Director +1 908 439
2200, ext. 5161 gregory.dickerson@ambest.com
Jim Peavy Director, Communications +1 908 439
2200, ext. 5644 james.peavy@ambest.com
Fairfax Financial (TSX:FFH)
Historical Stock Chart
From Jun 2024 to Jul 2024
Fairfax Financial (TSX:FFH)
Historical Stock Chart
From Jul 2023 to Jul 2024