Best’s News & Research Service - March 11, 2022 11:31 AM (EST)
AM Best Revises Outlooks to Positive, Affirms Credit Ratings of Acerta Compañia de Seguros, S.A.
- March 11, 2022 11:31 AM (EST)
Oldwick //BestWire// - AM Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating (FSR) of B+ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb-” (Good) of Acerta Compañia de Seguros, S.A. (Acerta) (Panama).
The Credit Ratings (ratings) reflect Acerta’s balance sheet strength, which AM Best assesses as strongest, as well as its marginal operating performance, neutral business profile and marginal enterprise risk management (ERM).
The positive outlooks are based on Acerta’s continuous adjustments in underwriting practices that positively influence its operating performance while expanding its capital base. Additionally, a more-developed ERM framework positively contributes to the rating assessments.
The ratings also recognize Acerta’s affiliation to Grupo Prival, S.A., its ultimate parent, following management´s decision to reduce pressure in the regulatory capital requirement of its main financial institution, Prival Bank S.A., through major shareholder ownership of its insurance operation.
Acerta initiated operations in Panama City in 2010, and in 2017, the company acquired ADISA Panama. At year-end 2021, the company stood as Panama’s 12th largest insurer, with a market share of 1.6%. Its main insurance lines of business are surety, motor and health, based on gross written premiums. Acerta operates through a network of agents, brokers and direct distribution channels.
The company’s capital and surplus has grown at a compound annual growth rate of 24% over the past five years, supported by profitability, as reflected by a return on equity of 4.2% in 2021. Acerta’s capitalization is reinforced by a diversified reinsurance program with highly rated entities. Moreover, its capitalization and liquidity have provided the company with flexibility in order to cover historical deviations in claims.
Acerta’s continuous claims-containment adjustments within its motor and health insurance lines, coupled with its expertise in the surety business, continue to reflect improvements in underwriting performance, as reflected by a combined ratio below 100% at year-end 2021. AM Best expects Acerta to sustain this trend through year-end 2022, despite challenges arising from a very competitive market and economic uncertainty.
AM Best also expects improvements in 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 could take place if the company sustains improvements in its operating performance, coupled with a thorough implementation of its ERM framework. Negative rating actions could occur if inconsistencies within its ERM profile, evolving market conditions or strategic opportunities affect the company’s risk-adjusted capitalization or business profile.
The methodology used in determining these ratings is Best’s Credit Rating Methodology (Version Nov. 13, 2020), 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 (Version Oct. 13, 2017)
- Evaluating Country Risk (Version Oct. 13, 2017)
- Rating Surety Companies (Version April 7, 2021)
- Scoring and Assessing Innovation (Version March 5, 2020)
- Understanding Global BCAR (Version July 22, 2021)
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: Feb. 18, 2021
- Date Range of Financial Data Used: Dec. 31, 2016-Dec. 31, 2021
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.
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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 London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.