Colonial Group International Ltd and its life/health and property/casualty operating subsidiaries have had their issuer credit ratings (ICR) of "a-", and financial strength rating (FSR) of "A-" affirmed by A.M. Best Co. The outlooks assigned to both the ICR and the FSR are stable.

According to AM Best the ratings are a reflection on the group's consistent increase in its total consolidated equity position, good risk-adjusted capitalisation and its diversified business profile.

With the exception of Colonial Life Assurance Company Limited (CLAC), Colonial Group's life/health subsidiaries have reported generally profitable trends over the past five years. The property/casualty business have generally demonstrated good underwriting results and improved operating performance trends. The group's reinsurance leverage has allowed it to manage its property/casualty risks while growing direct premium revenues in its core markets.

On the down side the group has a significant concentration of risk in the volatile life/health business, Best said. It is also vulnerable to the frequency and severity of catastrophic events in the property/casualty market. Additionally it suffers from the fluctuating investment performance in its operating subsidiaries.

The lack of profitability of CLAC continues to be a challenge for the group, the New Jersey-based agency added.