JUNE 15, 2022 10:58 AM (EDT)
AM Best Affirms Credit Ratings of Seguros El Roble, S.A.
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Senior Director, Analytics
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FOR IMMEDIATE RELEASE
MEXICO CITY - JUNE 15, 2022 10:58 AM (EDT)
AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Seguros El Roble, S.A. (El Roble) (Guatemala). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect El Roble’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The stable outlooks reflect AM Best’s expectation that the company will continue to perform in a profitable manner while it continues to strengthen its capital base. In addition, the outlooks recognize El Roble’s strategy to prioritize profitability over market share in a competitive marketplace.
El Roble, which was established in 1972, is the largest insurer in Guatemala, with a market share of 23.6%. Its portfolio is composed mainly of non-life products (85%), as of December 2021, with the remainder (15%) tailored for the life insurance market. On a net basis, the accidents and health line of business represents 47% of the company’s premium portfolio, with 30% in property/casualty lines and the remaining 23% in life insurance business. Bicapital Corporation, a Panama-based private financial group that has financial services operations, including banking, insurance and asset management, in Guatemala, Honduras, El Salvador, Bahamas, Panama and the United States, owns El Roble. El Roble ranks No. 1 in accidents and health and auto in Guatemala.
AM Best views the company’s business profile as neutral, based on El Roble’s market leadership and its capacity to adjust the terms of its offerings through 2021, while aiming at higher diversification in lines and distribution channels in 2022. In addition, the El Roble’s market-leading position has allowed it to outperform market growth rates continuously for the past 10 years while sustaining diversification in products and distribution channels.
AM Best’s stable market segment outlook on Guatemala’s insurance industry recognizes the macroeconomic fundamentals of the country, which helped limit the negative impact of the economic downturn on premium growth, claims and investments.
El Roble’s balance sheet strength is assessed at the strongest level, as the availability and quality of its capital are well-positioned for the company’s risk profile. During 2021, risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), remained stable as the company continued to post positive net results and making dividend payments. Historically, the reinsurance program and ERM capabilities of El Roble have been effective in protecting its balance sheet.
The operating performance of the company is assessed as strong due to its capacity to maintain constant growth in its net income backed up by solid underwriting. Strategic adjustments have allowed El Roble to navigate different cycles of the market. AM Best acknowledges that 2022 could be challenging, due to the normalization of claims frequency and the competitive marketplace.
Negative rating actions could take place if the company’s operating performance renders negative results, either from deterioration in underwriting quality or market conditions. Negative rating actions also could take place if AM Best’s assessment of balance sheet strength is impacted unfavorably by macroeconomic conditions that affect the company, its parent or Guatemala.
The methodology used in determining these ratings is Best’s Credit Rating Methodology (Version Nov. 13, 2020), 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:
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.
This press release relates to rating(s) that have been published on AM Best’s website. For additional 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.
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