JULY 22, 2020 10:34 AM (EDT)

AM Best Affirms Credit Ratings of Ocaso, S.A. Seguros y Reaseguros

 Ben Diaz-Clegg
Financial Analyst
+44 20 7397 0293

Ghislain Le Cam, CFA, FRM
Director, Analytics
+44 20 7397 0268

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644


LONDON - JULY 22, 2020 10:34 AM (EDT)
AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a+” of Ocaso, S.A. Seguros y Reaseguros (Ocaso) (Spain). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Ocaso’s balance sheet strength, which AM Best categorises as strongest, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.

Ocaso’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), at the strongest level. The assessment factors in Ocaso’s limited dependence on reinsurance, excellent liquidity and absence of financial leverage. A partially offsetting factor is the deficiency of the legacy pre-1999 “decesos” (funeral expense insurance) reserves, following regulatory changes that occurred in 2015. The reserves continue to be strengthened annually, and the deficiency will reduce incrementally until 2034.

Ocaso has a track record of strong operating performance, supported by very stable and profitable underwriting performance, evidenced by a five-year (2015-2019) weighted average combined ratio of 83.5%. Profitability of the life business continues to be affected by reserve strengthening of the run-off book of business that contains policies with high guarantees. The COVID-19 pandemic will affect the technical performance of the “decesos” book given the associated increase in mortality rates. Despite this, AM Best expects Ocaso’s operating performance to remain strong over the medium term.

Ocaso maintains a well-established competitive position in Spain, where it benefits from a recognised brand and a broad distribution network. The company has a defensible profile in its domestic market as a leading insurer of “decesos”, in which it has a very stable customer base. Approximately 97% of Ocaso’s underwriting revenue was sourced from Spain in 2019. Although this high concentration to the domestic market is a potential source of earning volatility, Ocaso has demonstrated its ability to produce resilient results, even during periods of recession.

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 media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

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 New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.

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