Best’s News & Research Service - February 15, 2018 02:40 PM (EST)
A.M. Best Affirms Credit Ratings of Austral Resseguradora S.A. and Austral Seguradora S.A.
- February 15, 2018 02:40 PM (EST)
Oldwick //BestWire// - A.M. Best has as affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Ratings of “bbb+” of Austral Resseguradora S.A. (Austral Re) and Austral Seguradora S.A. (Austral Seg). The outlook of these Credit Ratings (ratings) is stable. Both companies (collectively Austral) are domiciled in Brazil.
The ratings reflect Austral Re and Austral Seg’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. Austral Re is registered as a “local” reinsurer in Brazil, which positions the company for greater accessibility to business when compared to reinsurers licensed in the country as “admitted” or “occasional.” Austral Re’s operations focus on high growth areas, such as life, health, surety, engineering and crop risks, while Austral Seg mainly writes surety, oil and gas, auto (DPVAT), and more recently, engineering property risks. Additionally, Austral has adopted a wide-ranging risk management program and maintains a solid retrocessional strategy to safeguard capital and mitigate downside risk. Thus far, the group builds a favorable business profile as an agile player able to provide a range of (re)insurance solutions, while gaining recognition as a surety writer.
Partially offsetting these positive rating factors is Brazil’s highly competitive (re)insurance market as both home-grown and global (re)insurers continue to enter the market. In addition to difficult market conditions, Austral must also weather significant macroeconomic and political challenges in Brazil over the short and medium term. The group’s reinsurance program is generally placed with highly rated counterparties as it remains dependent on reinsurance to provide additional market capacity.
A.M. Best will continue to closely follow Austral’s operating performance, risk-adjusted capitalization and the execution of its business plan and risk management program. Positive rating drivers include continued very strong risk-adjusted capital, superior results when compared with its peer group over the medium term, and strong brand recognition in Brazil and abroad. Negative rating drivers include a material decline in risk-adjusted capital, poor operating results when compared with its peers, large losses and significant deterioration of Brazil’s economy or a sovereign downgrade that could negatively impact the group.
This press release relates to Credit Ratings that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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