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BEST'S CREDIT RATING ACTION

Best’s News & Research Service - March 10, 2022 10:17 AM (EST)

AM Best Affirms Credit Ratings of AVLA Perú Compañía de Seguros S.A.

  • March 10, 2022 10:17 AM (EST)

Mexico City //BestWire// - AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” (Good) of AVLA Perú Compañía de Seguros S.A. (AVLAP) (Lima, Peru). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect AVLAP’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

AVLAP is a Peru-based property/casualty insurer that began operations in 2015. It specializes in surety, with complimentary lines of credit insurance and engineering, and ranks eighth among non-life carriers in Peru and second in the country’s surety segment, based on market share.

AM Best views AVLAP’s business profile as neutral. Since its creation in 2015, AVLAP has capitalized successfully on Peru’s guarantee market, which has limited capacity, and become one of the country’s main participants for credit insurance and surety. During 2021, the company continued expanding its business as Peru’s economy recovered and the COVID-19 pandemic became more manageable, but the ongoing revival of Peru’s economy still leaves room for execution risk. AM Best’s neutral assessment of the company’s business profile is hindered by the small size of its operation within a small segment in Peru, which currently is in Country Risk Tier 3, per AM Best’s country risk evaluation.

AM Best considers the company’s operating performance to be adequate. AVLAP has been able to promote its products in a profitable manner and maintain adequate underwriting performance since 2017 and into 2021; however, the operation remains small and needs to converge to an adequate and less volatile cost structure, for which adjustments are taking place at a group level. AVLAP’s operating performance has been complemented by an active investment strategy that generated good investment results in 2021.

AVLAP’s balance sheet assessment is very strong given its solid capital base for the risks it undertakes, as reflected in its strongest risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio. The very strong assessment also recognizes the company’s capital management capabilities and the willingness and proven history of capital contributions made by its shareholders to support AVLAP’s growth. A panel of reinsurers supports balance sheet strength level with excellent security. Limiting the ratings is the potential pressure of the high financial leverage present in its ultimate parent company, AVLA S.A.

The stable outlooks reflects AM Best’s expectation that the company will continue to adjust to the improving market conditions profitably while maintaining sound capitalization.

Negative rating actions could take place if there are significant capital outflows to AVLAP’s holding company, AVLA S.A., that weaken AVLAP’s risk-adjusted capitalization to a level that no longer supports the current rating.

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:


  • Evaluating Country Risk (Version Oct. 13, 2017)

  • Understanding Global BCAR (Version July 22, 2021)

  • Available Capital & Holding Company Analysis (Version Oct. 13, 2017)

  • Rating Surety Companies (Version April 07, 2021)

  • Scoring and Assessing Innovation (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: February 5, 2021.

  • Date Range of Financial Data Used: December 31, 2015-December 31, 2021

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.

AM Best does not validate or certify the information provided by the client in order to issue a credit rating.

While the information obtained from the material source(s) is believed to be reliable, its accuracy is not guaranteed. AM Best does not audit the company’s financial records or statements, or otherwise independently verify the accuracy and reliability of the information; therefore, AM Best cannot attest as to the accuracy of the information provided.

AM Best’s credit ratings are independent and objective opinions, not statements of fact. AM Best is not an Investment Advisor, does not offer investment advice of any kind, nor does the company or its Ratings Analysts offer any form of structuring or financial advice. AM Best’s credit opinions are not recommendations to buy, sell or hold securities, or to make any other investment decisions. View our entire notice for complete details.

AM Best receives compensation for interactive rating services provided to organizations that it rates. AM Best may also receive compensation from rated entities for non-rating related services or products offered by AM Best. AM Best does not offer consulting or advisory services. For more information regarding AM Best’s rating process, including handling of confidential (non-public) information, independence, and avoidance of conflicts of interest, please read the AM Best Code of Conduct. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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



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