Best’s News & Research Service - November 04, 2022 12:22 PM (EDT)
AM Best Affirms Credit Ratings of Seguros e Inversiones, S.A.
- November 04, 2022 12:22 PM (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 e Inversiones, S.A. (SISA) (El Salvador). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect SISA’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.
The ratings also reflect SISA’s strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), supported by consistent profitability, a diversified business profile and market-leading position, as well as its appropriate reinsurance program. The company’s affiliation to Inversiones Financieras Grupo Imperia Cuscatlan S.A. (IFGIC), provides synergy and operating efficiencies. Offsetting these positive rating factors are El Salvador’s current macro-economic conditions, which may temper SISA’s asset allocation strategy within non-investment grade fixed income.
SISA initiated operations in 1962. At year-end 2021, the company was El Salvador’s market leader with 27% of gross premiums written covering domestic exposures. Sixty percent of its business portfolio is composed of life products, 28% by property/casualty products, and the remaining 12% in health. SISA’s distribution channels are positioned mainly with brokers, pension funds, bancassurance and the government. In 2020-2021, the merger and acquisition of Seguros SISA SV, S.A. was led by IFGIC, in order to support SISA’s growing domestic and regional expansion.
SISA’s risk-adjusted capitalization, as measured by BCAR, is supportive of its ratings, and its capital base was further strengthened further by the acquisition. Additionally, SISA’s balance sheet is supported by a comprehensive reinsurance program set with reinsurers with excellent security. AM Best expects the company’s very strong balance sheet assessment to remain pressured by the country’s macro fundamentals and its exposure to non-investment grade securities.
The company had a combined ratio above 100% for 2021, driven by the impacts of COVID-19 pandemic claims on its life business book, as well as increased frequency on its auto business resulting from economic reopening. However, SISA historically has shown disciplined underwriting, consistently reporting overall premium sufficiency levels that compare positively with its competitors, reflected in an improved combined ratio of 89%, as of September 2022.
Key factors that could lead to positive rating actions for SISA include sustained favorable trends in profitability while maintaining capital adequacy driven by good underwriting practices. Conversely, a sharp deterioration in operating performance and further pressure on balance sheet strength driven by El Salvador´s macro-economic conditions could lead to negative rating actions.
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:
- Available Capital & Holding Company Analysis (Version Oct. 13, 2017)
- Catastrophe Analysis in AM Best Ratings (Version Oct. 13, 2017)
- Evaluating Country Risk (Version Oct. 13, 2017)
- Scoring and Assessing Innovation (Version March 5, 2020)
- Understanding Global BCAR (Version June 30, 2022)
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. 15, 2021
- Date Range of Financial Data Used: Dec. 31, 2016-Sept. 30, 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.
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