Best’s News & Research Service - September 25, 2020 11:47 AM (EDT)
AM Best Affirms Credit Ratings of Worldwide Medical Assurance, Ltd. Corp.
- September 25, 2020 11:47 AM (EDT)
Mexico City //BestWire// - AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” of Worldwide Medical Assurance, Ltd. Corp. (WWMA) (Panama City, Panama). The outlook of these Credit Ratings (ratings) is positive.
The Credit Ratings (ratings) reflect WWMA’s balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The positive outlooks follow WWMA’s sustained balance sheet strength, underpinned by risk-adjusted capitalization maintained at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), as well as AM Best’s expectations that profitability will continue to help increase the company’s capital base.
The ratings also reflect WWMA’s consistently strong operating performance, supported by sound underwriting practices and a conservative investment strategy, while maintaining its successful gradual expansion into other Latin American markets. These strengths are offset by the increased underwriting risk deriving from the change in retention profile, the company’s ability to implement its growth targets and the highly competitive landscape in Latin America’s life and health insurance segments.
The company began operations in 1999 and has since grown successfully in its niche market, providing insurance for clients traveling overseas to receive medical attention. This is achieved through a mix of brokers, bancassurance and direct distribution channels. WWMA benefits from its partial ownership by KfW DEG, the German development bank, through its holding company, Worldwide Group, Inc. In recent years, WWMA has expanded operations into other Latin American markets such as Guatemala, Bolivia and Paraguay.
WWMA’s model of optimizing the selection of medical care providers is backed up by a reinsurance program placed with highly rated counterparties, supporting its strategy of global expansion and further development of its book of business. As of April 2020, an adjustment was made to the reinsurance structure of the health business line, moving toward higher retention. AM Best will continue monitoring the effect of this change on the company’s operating performance metrics and risk-adjusted capitalization.
Historically, WWMA has maintained positive capital-creation capacity, which, along with a conservative strategy of reinvesting profits, has contributed to its strongest risk-adjusted capitalization, as measured by BCAR. Capital management is strengthened further by the use and development of WWMA’s economic capital model and sound ERM practices.
WWMA’s strong underwriting and stringent expense practices translate into strong premium sufficiency metrics. Moreover, WWMA’s synergies with its sister company in the Dominican Republic, in conjunction with periodic adjustments to its reinsurance structure, have helped to optimize the company´s underwriting. These measures, combined with stable financial products, have resulted in sustained profitability indicators, such as return on equity and return on assets, which stood at 7.4% and 2.0%, respectively, at year-end 2019.
Factors that could lead to positive rating actions include the continued growth of the company’s capital base in the medium term, supportive of a strongest risk-adjusted capitalization level, as measured by BCAR, and successful consolidation of company’s business strategy in targeted locations, while maintaining strong operating performance. Negative rating actions are not expected in the short term, unless significant changes in the company’s strategy cause a negative effect in its income-generating profile, or if there is a material deterioration in risk-adjusted capitalization.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of AM Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology .
Key insurance criteria reports utilized:
- Evaluating Country Risk (Version Oct. 13, 2017)
- Understanding Universal BCAR (Version June 11, 2020)
- Available Capital & Holding Company Analysis (Version Oct. 13, 2017)
- Scoring and Assessing Innovation (Version March 5, 2020)
View a general description of the policies and procedures used to determine credit ratings. For information on the meaning of ratings, structure, voting and the committee process for determining the ratings and monitoring activities, please refer to Guide to Best’s Credit Ratings.
- Previous Rating Date: Sept. 6, 2019
- Date Range of Financial Data Used: Dec. 31, 2013-June 30, 2020
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