Best’s News & Research Service - April 04, 2024 01:27 PM (EDT)
AM Best Upgrades Credit Ratings of Acerta Compañia de Seguros, S.A.
- April 04, 2024 01:27 PM (EDT)
//BestWire// - AM Best has upgraded the Financial Strength Rating to B++ (Good) from B+ (Good) and the Long-Term Issuer Credit Rating to “bbb” (Good) from “bbb-” (Good) of Acerta Compañia de Seguros, S.A. (Acerta) (Panama City, Panama). The outlook of these Credit Ratings (ratings) has been revised to stable from positive.
The ratings reflect Acerta’s balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
The upgrading of Acerta’s ratings is based on its consistent adjustments in underwriting practices, which positively influence its operating performance, while expanding its capital base, as well as the improvements and expected stability in the company’s ERM framework.
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. As of December 2023, the company stood as Panama’s 12th largest insurer, with a market share of 1.7%. Its main insurance lines of business are surety, motor and health, which are 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 8.0% over the last five years, supported by profitability, as reflected by a return on equity of 10.9% in 2023. 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, multiple risks and health insurance lines, coupled with its expertise in the surety business, continue to reflect improvements in underwriting performance, evidenced by premium sufficiency as of year-end 2023. AM Best expects Acerta to sustain this trend through year-end 2024, supported by renovation of current contracts and an improved performance in its property/casualty business, despite challenges arising from a very competitive market and economic uncertainty.
Although unlikely in the near term, positive rating actions could take place if Grupo Prival, S.A 's ability and willingness to support Acerta continues, while showing a consistent stability in its performance and credit profile. Negative rating actions could take place if the deterioration of the Panamanian market conditions or an unfavorable development of the company's business strategy render the operating performance to levels no longer supportive of the adequate assessment. Additionally, negative rating actions could also occur as a result of a deterioration within the ultimate parent's credit profile.
The methodology used in determining these ratings is Best’s Credit Rating Methodology (Version Jan. 18, 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:
- Evaluating Country Risk (Version May 04, 2023)
- Understanding Global BCAR (Version Mar 07, 2024)
- Available Capital and Insurance Holding Company Analysis (Version Jan 18, 2024)
- Rating Surety Companies (Version Apr 07, 2021)
- Scoring and Assessing Innovation (Version Feb 27, 2023)
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: Mar. 29, 2023Initial Rating Date: Nov. 28, 2018Date Range of Financial Data Used: Dec. 31, 2017-Dec. 31, 2023 Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
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