Best’s News & Research Service - October 01, 2024 05:28 PM (EDT)
AM Best Assigns Credit Ratings to AVLA Re Ltd.
- October 01, 2024 05:28 PM (EDT)
//BestWire// - AM Best has assigned a Financial Strength Rating of B++ (Good) and a Long-Term Issuer Credit Rating of “bbb+” (Good) to AVLA Re Ltd. (AVLA Re) (Bermuda). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings of AVLA Re reflect its 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).
AVLA Re is ultimately owned by AVLA Bermuda Holding Corp Ltd. (ABHC), a financial holding company domiciled in Bermuda, engaged in insurance operations in Chile, Peru, Mexico and Brazil. As of June 2024, ABHC had equity of USD 83 million.
AVLA Re is considered a new company as it began operations in January 2022, under a Class 3A insurer license in Bermuda. The company currently reinsures business from other ABHC subsidiaries, in Chile, Peru, Mexico and Brazil, and plans for the medium to long term to reinsure premiums from third parties. AVLA Re’s business profile is considered limited, given the small size of the company and its high degree of competition.
The balance sheet strength is considered very strong. AVLA Re has received two capital infusions from its holding company since its creation. AM Best will monitor any capital flows to and from the company to continue assessing the strength of its balance sheet.
The company’s operating performance is considered adequate and in line with its position as a recently formed company. AVLA Re’s premium growth has been prudent, with controlled increments in businesses from subsidiaries in the group. Claims experience has been in line with organization’s expectations and AVLA Re was able to post positive bottom-line results in its second year of operations. AM Best will continue to monitor the underwriting quality and operating metrics of this building block.
AVLA Re’s ERM assessment is considered appropriate for its risk appetite and strongly supported by ABHC’s back office. AVLA Re benefits from capital support from ABHC, as well as synergies and brand recognition from the group, with which AVLA Re shares an experienced management.
The stable outlooks reflect AM Best's expectations that AVLA Re will meet its business objectives in terms of operating metrics and capitalization.
Negative rating actions could occur if AVLA Re’s capital base eroded due to significant capital base deterioration or sustained unfavorable operating results. Negative rating actions could also occur should AVLA Re’s importance to the group's strategy lessens in AM Best's opinion.
Positive rating actions are not likely to occur in the short to medium term, but in the long term could be driven by a steady, upward trend in operating results, which in turn, strengthen its capital base.
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 June 6, 2024)
- Understanding Global BCAR (Version Aug. 1, 2024)
- Rating Surety Companies (Version April 25, 2024)
- Rating New Company Formations (Version Sept. 5, 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: Not rated
- Date Range of Financial Data Used: Dec. 31, 2022-June 30, 2024
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
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.
If the ratings referred in this press release do not indicate a specific country suffix, it is understood that they are granted globally and not on a national scale.
AM Best does not validate or certify the information provided by the client in order to issue a credit rating.
While the information obtained from the material source(s) is believed to be reliable, its accuracy is not guaranteed. AM Best does not audit the company’s financial records or statements, or otherwise independently verify the accuracy and reliability of the information; therefore, AM Best cannot attest as to the accuracy of the information provided.
AM Best’s credit ratings are independent and objective opinions, not statements of fact. AM Best is not an Investment Advisor, does not offer investment advice of any kind, nor does the company or its Ratings Analysts offer any form of structuring or financial advice. AM Best’s credit opinions are not recommendations to buy, sell or hold securities, or to make any other investment decisions. View our entire notice for complete details.
AM Best receives compensation for interactive rating services provided to organizations that it rates. AM Best may also receive compensation from rated entities for non-rating related services or products offered by AM Best. AM Best does not offer consulting or advisory services. AM Best keeps certain activities of its business units separate from each other to preserve the independence and objectivity of their respective activities. As a result, certain business units of AM Best may have information that is not available to other AM Best business units. AM Best has established policies and procedures to maintain the confidentiality of certain confidential (non-public) information received in connection with each analytical process. For more information regarding AM Best’s rating process, including handling of confidential (non-public) information, independence, and avoidance of conflicts of interest, please read the AM Best Code of Conduct. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
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.