Best’s News & Research Service - October 02, 2024 01:05 PM (EDT)
AM Best Affirms Credit Ratings of Olé Insurance Group Corp I.I.
- October 02, 2024 01:05 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 Olé Insurance Group Corp I.I. (Olé Insurance) (San Juan, Puerto Rico). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Olé Insurance’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.
The ratings also reflect the company’s strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), prudent investment practices and its innovative business model. Conversely, Olé Insurance is subject to volatility derived from its relatively recent start of operations, expansion risk and sensitivity to changes in the evolution of its business plan.
Olé Insurance specializes in term life insurance and began operations in 2019 as Amedex Assurance Corp I.I. The company is licensed as a Class 5 International Insurer. Geographically, as of June 2024, gross premiums are mainly distributed in Latin America: Ecuador (23%), Mexico (23%), Venezuela (9%) and the remainder (45%) in over 15 other countries. The company has a growing distribution network, with over 3,000 independent agents based in the United States and Latin America.
The company’s operation is supported by automated systems and specialized personnel equipped with digital tools to assist prospective clients. Olé Insurance also uses background checks and technological tools to analyze the profiles of its clients. Some applications are automatically approved, and do not require medical examinations for assured sums of up to USD 1 million.
Overall, the company’s balance sheet is very strong, but it is subject to volatility derived from its net business portfolio of distribution and growth.
As of year-end 2023, Olé Insurance’s direct written premiums stood at USD 6.4 million, and, as expected from a start-up company, technical income and year-end results were negative. Prudent underwriting practices are the key drivers that could influence future operating results. As of June 2024, the company has reached breakeven, generating nearly USD 100,000 in net income.
Negative rating actions could occur if premium growth or adverse development of the underwriting portfolio erodes Olé Insurance’s capital base and reduces risk-adjusted capitalization to a level that no longer supports the ratings, or as a result of an unfavorable development in the company's business strategy. Although unlikely, factors that could lead to positive rating actions include the continued growth of Olé Insurance’s capital base in the medium term, supportive of its current level of risk-adjusted capitalization, and successful consolidation of its business strategy.
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)
· Available Capital and Insurance Holding Company Analysis (Version Aug. 15, 2024)
· Rating New Company Formations (Version Sept. 5, 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: Oct. 30, 2023
· Initial Rating Date: Oct. 30, 2023
· Date Range of Financial Data Used: Nov. 7, 2019-June 30, 2024
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