Best’s News & Research Service - September 03, 2020 03:12 PM (EDT)
AM Best Affirms Credit Ratings of Seguros Suramericana S.A.
- September 03, 2020 03:12 PM (EDT)
Mexico City //BestWire// - AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Seguros Suramericana S.A. (Sura) (Panama). The outlook of these Credit Ratings (ratings) is positive.
The ratings reflect Sura’s balance sheet strength, which AM Best categorizes as strongest, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
Sura’s balance sheet strength is underpinned by its risk-adjusted capitalization being at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), supported by a well-structured reinsurance program and synergies provided by Grupo de Inversiones Suramericana S.A. (Grupo Sura), a leading Colombia financial services company in the Latin American insurance, asset management and banking industries, as well as sound underwriting performance, initially driven by its previous integration with Seguros Banistmo, S.A. in 2015. Offsetting these positive rating factors is Panama’s highly competitive landscape, which could pressure Sura’s operating performance.
As of year-end 2019, the company was the fourth-largest insurer in Panama, with a market share of 9.6%; 69.4% of its business portfolio is composed of non-life products, with life products making up the remaining 30.6%. Sura’s main property/casualty business segment is auto, which represents 40% of its gross written premium.
Grupo Sura’s initiative in 2018 to optimize shareholder value through the merger of intermediate insurance holding companies, Suramericana S.A. and Inversura Panamá Internacional S.A., drove a stock split transaction for its subsidiary, Aseguradora Suiza Salvadoreña, S.A.. This further enhanced Sura’s risk-adjusted capitalization, which was already at the strongest level. Sura’s capital base continues to be driven by its value-based management model and is reinforced consistently through profitability and a prudent dividend policy, while meeting the group’s post-merger return on investment goals. AM Best expects Sura to follow consistent capital management guidelines supportive of its current ratings and positive outlooks. Additionally, the company’s balance sheet strength is supported by a comprehensive reinsurance program, set with reinsurers that have excellent security, and the implementation of an internal economic capital model.
Sound underwriting practices, coupled with post-merger synergies that continue to contain administrative costs, have driven Sura´s strong operating performance as reflected in profitability metrics, characterized by an 87% combined ratio at year-end 2019. In addition, the company’s business profile continues to benefit in terms of added diversification and synergies, such as the bancassurance distribution channel.
Positive changes in the ratings or outlooks could occur if the company continues to maintain its post-merger performance and profitability in conjunction with consistent capital management, leading to higher levels of risk-adjusted capitalization. Negative rating actions could result if the expected operating performance deviates considerably and weakens due to Panama’s highly competitive environment, 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 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:
- Available Capital & Holding Company Analysis (Oct. 13, 2017)
- Catastrophe Analysis in AM Best Ratings (Version Oct. 13, 2017)
- Evaluating Country Risk (Version Oct. 13, 2017)
- Scoring and Assessing Innovation (Version March 5, 2020)
- Understanding Universal BCAR (Version June 11, 2020)
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 Guide to Best’s Credit Ratings.
- Previous Rating Date: Aug. 29, 2019
- Date Range of Financial Data Used: Dec. 31, 2014-June 30, 2020
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.
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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.
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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 New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.