Best’s News & Research Service - February 10, 2023 01:25 PM (EST)
AM Best Downgrades Credit Ratings of Dentegra Seguros Dentales, S.A. and Places Ratings Under Review With Negative Implications
- February 10, 2023 01:25 PM (EST)
Mexico City //BestWire// - AM Best has downgraded the Financial Strength Rating to B++ (Good) from A (Excellent), the Long-Term Issuer Credit Rating to “bbb+” (Good) from “a+” (Excellent) and the Mexico National Scale Rating to “aa+.MX” (Superior) from “aaa.MX” (Exceptional) of Dentegra Seguros Dentales, S.A. (DSD) (Mexico). Concurrently, AM Best has placed these Credit Ratings (ratings) under review with negative implications. These rating actions follow the recent announcement of the acquisition of DSD by Auna S.A.A. (Auna), a Peruvian health-focused company.
Prior to these rating actions, DSD was a member of Dentegra Group, Inc.’s association with Delta Dental companies (Dentegra Group) and deemed by AM Best to be a strategically important subsidiary. On Feb. 1, 2023, Auna announced that it had acquired 100% ownership of DSD. Due to this event, DSD is no longer affiliated with Dentegra Group; therefore, AM Best has removed its group status.
The ratings reflect DSD’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
DSD’s risk-adjusted capitalization stands at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The company has a conservative investment strategy in place, paired with strong underwriting practices, which have allowed it to historically report positive bottom-line results. DSD is a market leader in the relatively small dental segment within Mexico’s insurance industry and is concentrated in two products, dental and vision insurance.
With the change in ownership, the company no longer benefits from being integrated with Dentegra Group, Inc., which brought operational leverage through common systems, procedures and ERM practices. AM Best requires further information regarding DSD ‘s new shareholders to fully assess the impact that the change in ownership could potentially have in DSD ratings.
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:
• AM Best’s Ratings On a National Scale (Version Oct. 13, 2017)
• Available Capital & Holding Company Analysis (Oct. 13, 2017)
• Evaluating Country Risk (Version Oct. 13, 2017)
• Understanding Global BCAR (Version June 30, 2022)
• 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: June 23, 2022
• 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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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.