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Best’s News & Research Service - October 02, 2020 03:50 PM (EDT)

AM Best Assigns Credit Ratings to Seguros Universales, S.A.

  • October 02, 2020 03:50 PM (EDT)
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Mexico City //BestWire// - AM Best has assigned a Financial Strength Rating of B+ (Good) and a Long-Term Issuer Credit Rating of “bbb-” to Seguros Universales, S.A. (Universales) (Guatemala). The outlook assigned to these Credit Ratings (ratings) is stable.

The ratings reflect Universales’ balance sheet strength, which AM Best categorizes as very strong, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The stable outlooks reflect AM Best’s expectation that the company will maintain a stable capital base on the back of positive bottom line results in conjunction with an evolving ERM framework.

Universales, which was established in 1962, is the fifth-largest insurer in Guatemala, with a market share of 8%. Its portfolio is composed mainly of non-life products (84%), as of December 2019, with the remainder (16%) directed to life insurance market. The company holds very competitive positions in the property/casualty (P/C) and accident and health segments, ranked fourth and fifth, respectively. The company is owned privately by a group of 10 shareholders, none with a stake larger than 23%.

AM Best views Universales’ business profile as neutral, based on the company’s market position and its ability to develop niche markets through commercial alliances, distribution channels and development of new offerings. AM Best’s stable market segment outlook on Guatemala’s insurance industry recognizes that growth prospects have become limited due to the effects of the COVID-19 pandemic, but that macroeconomic fundamentals provide stability to the system to mitigate the potential impact on claims and financial investments derived from the crisis. In addition, the company’s digitalization efforts have navigated the current economic cycle successfully, making way for further administrative efficiencies.

AM Best assesses Universales’ balance sheet strength as very strong, due to the availability and quality of the capital, reinsurance protection and conservative risk profile. The company’s constant profitable results have reflected in a growing capital base that despite being subject to dividend payments have proven sufficient to face the conservative risk profile of the company’s asset base. The company has set a reinsurance program based on a mixture of treaty and facultative programs with highly rated reinsurers, which historically have been effective in protecting the company’s balance sheet.

AM Best considers Universales’ operating performance as marginal due to its dependency in other technical income and investment results to post positive bottom line results, as its combined ratio has been consistently above 100. P/C lines underwriting has improved recently, but the life segment is limited by high acquisition expenses directly associated with its strategy, aligned with the company’s expected performance. In August 2020, Universales’ net result benefited from lower claim frequency even with lower premium volume due to the COVID-19 pandemic. AM Best acknowledges that 2020 will be a difficult year for business, albeit muted in terms of expected claims, and will continue to monitor events that could harm claim costs given the company’s exposure to catastrophe events.

Positive rating actions could take place if there is a stabilization of Universales’ operating performance in terms of bottom line results or if its risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), improves in a constant and steady way in the medium term. Negative rating actions could take place if the company’s capital base deteriorates as a consequence of an unsuccessful strategy affecting results and risks undertakings.

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:


  • Evaluating Country Risk (Version Oct. 13, 2017)

  • Understanding Universal BCAR (Version June 11, 2020)

  • Catastrophe Analysis in AM Best Ratings (Version Oct. 13, 2017)

  • Available Capital & Holding Company Analysis (Version Oct. 13, 2017)

  • Scoring and Assessing Innovation (Version March 5, 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: Not rated.

  • Date Range of Financial Data Used: Dec. 31, 2014-Aug. 31, 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.

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. 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 media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

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.



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