Best’s News & Research Service - October 05, 2022 10:39 AM (EDT)
AM Best Affirms Credit Ratings of Seguros Universales, S.A.
- October 05, 2022 10:39 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-” (Good) of Seguros Universales, S.A. (Universales) (Guatemala). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Universales’ balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The stable outlooks reflect AM Best’s expectation that the company will be able to maintain its risk-adjusted capitalization while new business performance develops.
Universales, which was established in 1962, is the sixth-largest insurer in Guatemala, with a market share of 7.74%. The company’s portfolio, as of August 2022, is composed mainly of non-life products (75%), with the remainder (25%) focused on the life insurance market. The company holds very competitive positions in the property/casualty (P/C) and accident and health segments, ranking 5th and 6th, respectively. The company is owned privately by a group of 10 shareholders, none with a stake larger than 23%.
AM Best views Universales’ business profile as neutral, based on the company’s market position and its ability to develop niche markets through commercial alliances, distribution channels and by developing new offerings. The company’s management capabilities have allowed it to enter key business in Guatemala, reflecting in a 30.9% growth for 2021. In addition, the company’s digitalization and ERM efforts are allowing the company to navigate the ongoing economic cycle successfully.
AM Best assesses Universales’ balance sheet strength as very strong, due to the availability and quality of the capital, reinsurance protection and conservative risk profile. The company’s consistent profitable results are reflected in a growing capital base with a conservative risk profile and well-structured dividend payments. Universales has a reinsurance program based on a mixture of treaty and facultative programs with highly rated reinsurers, which historically have been effective in protecting its balance sheet.
AM Best views Universales’ operating performance as marginal due to its dependency on other technical income and investment results to generate positive bottom-line results, as its combined ratio has been consistently above 100. In the past three years, the company has adjusted its offerings in terms of price and coverages, which helped it to improve its loss ratio most recently 48% in August 2022; however, administrative expenses and acquisition costs continue to limit its performance. AM Best will continue to monitor the performance as its market experience develops.
Negative rating actions could take place if the company’s capital base deteriorates as a consequence of higher risks undertakings or underperforming business without prudent capital management. Positive rating actions could take place if operating performance improves in a consistent and sustained way in the medium term.
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 June 30, 2022)
- Catastrophe Analysis in AM Best Ratings (Version Oct. 13, 2017)
- 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: Oct. 1, 2021
- Date Range of Financial Data Used: Dec. 31, 2016-Aug. 31, 2022
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.
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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.