Best’s News & Research Service - July 17, 2025 04:35 PM (EDT)
AM Best Affirms Credit Ratings of AVLA Seguros de Crédito y Garantía S.A.
- July 17, 2025 04:35 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 AVLA Seguros de Crédito y Garantía S.A. (AVLA Chile) (Chile). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect AVLA Chile’s balance sheet strength, which AM Best assesses as strong, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management.
The ratings also recognize AVLA Chile’s affiliation and strategic importance to its ultimate parent, AVLA Bermuda Holding Corp Ltd. (ABHC), a financial holding company domiciled in Bermuda, engaged in insurance operations in Chile, Peru, Mexico, Brazil and the United States. As of May 2025, ABHC had equity of USD 89 million.
AVLA Chile began operations in Chile in 2013 as AVALCHILE, before changing its name to AVLA Chile in 2016. AVLA Chile specializes in credit insurance and surety; it ranks first in Chile in surety and within the top three in credit insurance, based on market share. AM Best assesses AVLA Chile’s business profile as neutral. The company has redefined its risk appetite successfully through adverse market conditions. In AM Best’s view, management’s capabilities remain key to adjusting its product offerings amid these evolving market conditions.
During the past two years, AVLA Chile’s operating performance has been limited by its underwriting results and has followed a downward trend that as of December 2024, resulted in a USD 1.4 million loss. The company’s results were impacted by an increase in claims from financial guarantees, which could not be offset by revenue from fees for credit studies, tied to credit insurance policies, in contrast to 2023. The company has taken measures to correct this trend, and as of March 2025, combined ratio has returned to premium sufficiency levels. AM Best will continue to monitor AVLA Chile’s results and underwriting quality.
AVLA Chile’s balance sheet strength assessment is strong given its solid capital base for the risks it undertakes. The strong balance sheet strength assessment recognizes the company’s reinsurance dependance, while also taking into account the excellent security level of its reinsurance panel.
AVLA Chile benefits from belonging to the AVLA Group, as reflected by the willingness and proven history of capital contributions made by its shareholders to support growth, with the latest one taking place in 2024, equivalent to USD 4.8 million.
Positive rating actions could take place if AVLA Chile can show a stable upward trend in risk-adjusted capitalization, underpinned by consistently positive bottom-line results. Positive rating actions also could take place if AVLA Chile is able to demonstrate a consistent upward trend in its bottom-line results, that compares favorably with the adequate assessment. Negative rating actions could occur if in AM Best’s opinion, the strategic importance of AVLA Chile to its group decreased significantly, or if the AVLA Group’s consolidated financial strength deteriorated to a point no longer supportive of the current ratings.
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:
- Understanding Global BCAR (Version Aug. 1, 2024)
- Rating Surety Companies (Version April 25, 2024)
- Available Capital and Insurance Holding Company Analysis (Version Aug. 15, 2024)
- Scoring and Assessing Innovation (Version Feb. 20, 2025)
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: June 14, 2024
- Initial Rating Date: Dec. 5, 2018
- Date Range of Financial Data Used: Dec. 31, 2019-March 31, 2025
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