Best’s News & Research Service - November 28, 2018 03:20 PM (EST)
A.M. Best Assigns Credit Ratings to Acerta Compañia de Seguros, S.A.
- November 28, 2018 03:20 PM (EST)
Mexico City //BestWire// - A.M. Best has assigned a Financial Strength Rating of B+ (Good) and a Long-Term Issuer Credit Rating of “bbb-” to Acerta Compañia de Seguros, S.A. (Acerta) (Panama). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect Acerta’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its marginal operating performance, neutral business profile and marginal enterprise risk management (ERM).
Acerta’s balance sheet strength is underpinned by risk-adjusted capitalization at the strongest level, as measured by Best´s Capital Adequacy Ratio (BCAR). The ratings also reflect a well-structured reinsurance program and an experienced management team. Partially offsetting these positive rating factors are Acerta´s historical volatility in underwriting results, strong competition in its main business lines and execution risk derived from its integration with Aseguradora del Istmo, S.A. (ADISA Panama), which it acquired in 2017.
Acerta initiated operations in Panama City in 2010. As of year-end 2018, the company stood as the 12th-largest insurer, with a market share of more than 1.5%. Its main business segments are surety and motor, representing 36% and 35% of its total gross written premiums respectively. Acerta operates through a network of agents, brokers and direct distribution channels. The acquisition of ADISA Panama was led in 2017 by the company´s ultimate parent, Acerta Holdings, S.A.
The company´s capital and surplus has grown at a compound annual growth rate of 27% over the past five years, ultimately enhanced by the merger. Acerta’s capitalization is supported further by a reinsurance program with highly rated entities. Moreover, its capitalization and liquidity have provided the company with flexibility in order to cover historic deviations in claims.
Acerta’s claims-containment adjustments within its motor and health insurance lines, coupled with synergies derived from the transaction, have led to improvements in underwriting performance, as reflected by combined ratios converging toward 100% at year-end 2018. A.M. Best expects Acerta to sustain this trend through year-end 2019, despite challenges arising from a very competitive and maturing market.
Following the integration of ADISA Panama, A.M. Best expects a thorough and improved implementation of Acerta’s ERM framework in order to mitigate emerging risks that may erode the company´s balance sheet strength, operating performance or business profile.
Positive changes in the ratings or outlooks could take place if the company sustains improvements in its post-merger operating performance, coupled with a thorough implementation of its ERM framework, while maintaining risk-adjusted capitalization at strongest levels. Negative rating actions could occur if the expected operating performance deviates considerably or weakens as a result of inconsistencies within its ERM profile, affecting the company’s risk-adjusted capitalization or business profile.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. 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:
- Available Capital & Holding Company Analysis (Version Oct. 13, 2017)
- Evaluating Country Risk (Version Oct. 13, 2017)
- Rating Surety Companies (Version Oct. 13,2017)
- Understanding Universal BCAR (Version May 14, 2018)
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 Understanding Best’s Credit Ratings.
- Previous Rating Date: Not rated
- Date of Financial Data Used: Sept. 30, 2018
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