AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of La Colonial, S.A. – Compañía de Seguros (La Colonial) (Santo Domingo, Dominican Republic). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect La Colonial’s balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

The rating affirmations reflect La Colonial’s risk-adjusted capitalization being at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), mainly as a result of positive bottom-line results, as well as the acknowledgement of the underwriting team’s skills amid potential challenges from harsher competition. Partially offsetting these positive rating factors is the competitive market environment in the Dominican Republic.

La Colonial is the fifth-largest insurance company in the Dominican Republic, with an 8.5% market share as of May 2025. The company has maintained its leading position in the Dominican Republic despite changing market dynamics, which includes the continuous inflow of new health insurance premiums to the system from new participants. La Colonial operates as a multiline insurer, with 84% of its portfolio directed to property/casualty lines, based on gross written premium, with life/health insurance comprising 16%.

In 2024, the company reported a non-life combined ratio of 97.7%, mainly driven by the stability of the loss ratio, and expense efficiencies achieved since previous periods. La Colonial’s benefits paid to net premium written ratio for its life business increased to 65% from 62.6%, still contributing to the period’s positive bottom-line result. For 2025 and onward, operating efficiencies might be harder to sustain; however, AM Best considers La Colonial’s management team to be well-prepared to maintain solid profitability and growth to support its operation.

La Colonial’s risk-adjusted capitalization remains at the strongest level, as measured by BCAR, supported adequately by a comprehensive reinsurance program that mitigates the potential impact from regional natural disasters on the company’s results. These characteristics are reflected in its solvency and capitalization metrics and its excellent market position. Going forward, AM Best expects the company to continue performing with premium sufficiency, driven by lower technical costs in the medium term.

Positive rating actions could take place if La Colonial is able to maintain its current level of risk-adjusted capitalization while improving its bottom-line results and profitability indicators to levels more in line with highly rated peers. Factors that might lead to negative rating actions include any major changes in La Colonial’s capital base, such as significant dividends or capital outflows, which diminish AM Best’s view of the company’s balance sheet strength.

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