Colonial Group International Ltd.'s life/health and property/casualty operating subsidiaries have been affirmed the financial strength ratings (FSR) of A- (excellent) and issuer credit ratings (ICR) of 'a-' by AM Best Co.

The outlook for all ratings is stable.

Colonial Group is a wholly owned intermediate holding company of parent company Edmund Gibbons Ltd. and all of the companies are domiciled in Bermuda.

The rating affirmations reflect the operating subsidiaries' adequate risk-based capitalisation, the consistent increase in total consolidated equity despite some unfavourable operating results in the most recent year, and their diversified business profiles, with the focus being on life/health and property/casualty markets in Bermuda, the Bahamas, Cayman Islands and the Caribbean.

Colonial Group's life/health subsidiaries have reported unfavourable underwriting results over the past year, with the exception of Colonial Life Assurance Company Ltd., whose net underwriting losses narrowed in 2009 over 2008.

Colonial Medical Insurance Company Ltd. and Atlantic Medical Insurance Ltd. (Bahamas) were negatively affected by unusually high cost claims experience triggered mostly by a weak economic environment. Both are regional companies with a continued strong presence in their respective health markets. On a net income basis, the life/health subsidiaries' combined results were lower in 2009 from 2008 but remained positive due to an improvement in the financial markets.

Within the property/casualty operations, Colonial Group's three operating subsidiaries have generally demonstrated good underwriting results, improved operating performance trends and continuing parental support.

Furthermore, Colonial Group benefits from these subsidiaries' reinsurance leverage to manage their property/casualty risks, while growing direct premium revenues in their core markets.

Partially offsetting these strengths are Colonial Group's significant concentration risk in the volatile life/health lines of business in several geographic regions, vulnerability to frequency and severity of catastrophic events from the property/casualty risks within the markets it serves, large amounts of inter-company transactions and challenges in improving its health business profitability in the current economic environment.