Best’s News & Research Service - September 19, 2024 02:11 PM (EDT)
AM Best Affirms Credit Ratings of Sura Re Ltd.
- September 19, 2024 02:11 PM (EDT)
//BestWire// - AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” (Good) of Sura Re Ltd. (Sura Re) (Bermuda). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Sura Re’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).
Sura Re is a captive reinsurer of Suramericana S.A. (Sura), a Colombia-based insurance group that is 81.1% owned by Grupo de Inversiones Suramericana S.A. The company was established in Bermuda as a Class 3A insurer in December 2015, and in April 2022, received approval from the regulator to operate as a Class C insurer. Sura Re’s main purpose is to participate in property business underwritten by Sura’s affiliates across Latin America (i.e., Chile, Colombia, México, Panama and Dominican Republic) to help the group achieve its strategic regional goals. AM Best recognizes the greater relevance that Sura Re is aiming to achieve in Sura’s overall regional strategy, which is starting to be reflected with Sura’s expanded geographic scope.
AM Best assesses Sura Re’s balance sheet strength as very strong, given its strongest risk-adjusted capitalization as measured by Best’s Capital Adequacy Ratio (BCAR), which is more than adequate for the risks it holds. During 2023, capital requirements continued to reflect higher premium risk as the company executed its strategy and retained a higher portion of risks. Going forward, AM Best expects Sura Re’s capital requirements to increase due to a larger deployment of its capital, while supporting its current strongest level of risk-adjusted capitalization. The company’s asset-liability management follows a very conservative investment policy focused on maintaining liquidity to cover Sura Re’s obligations in terms of tenure and currencies. Additionally, given the complete support provided by Sura’s expertise and management team, AM Best considers Sura Re’s ERM practices as appropriate.
On December 2023, Sura Re reported positive net profit for the fifth consecutive year, since its inception. Operative performance was driven by technical results, as Sura Re’s good underwriting practices and continuous fee income persists. AM Best remains attentive to macroeconomic conditions and its impact on the company’s investment results. The captive nature of the company within one of the largest insurance groups in Latin America provides flexibility in terms of growth and premium risk to efficiently manage its capital and return positions in the future. Therefore, AM Best considers operating performance to be adequate for the current ratings.
Negative rating actions could take place if Sura Re fails to meet its financial performance objectives, with results that fall to a level that impacts capital; and therefore, its risk-adjusted capitalization, either by business decisions, importance to its financial group or deteriorating macroeconomic conditions. No positive rating actions are foreseen in the short term; however, they could occur if Sura Re is able to constantly strengthen its risk-adjusted capitalization while following prudent risk takings.
AM Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.
The methodology used in determining these ratings is Best’s Credit Rating Methodology (Version Aug. 29, 2024), 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 Jun. 6, 2024)
- Understanding Global BCAR (Version Aug. 1, 2024)
- Catastrophe Analysis in AM Best Ratings (Version Feb. 8, 2024)
- Available Capital and Insurance Holding Company Analysis (Version Aug. 15, 2024)
- Scoring and Assessing Innovation (Version Feb. 27, 2023)
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, relevant sources of information and the frequency for updating ratings, please refer to Guide to Best’s Credit Ratings.
- Previous Rating Date: July 14, 2023
- Initial Rating Date: Mar. 21, 2018
- Date Range of Financial Data Used: Dec. 31, 2018-Dec. 31, 2023
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