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Best’s News & Research Service - June 14, 2024 03:24 PM (EDT)

AM Best Affirms Credit Ratings of AVLA Seguros de Crédito y Garantía S.A.

  • June 14, 2024 03:24 PM (EDT)
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//BestWire// - AM Best has affirmed the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb+” (Good) of AVLA Seguros de Crédito y Garantía S.A. (AVLA) (Chile). The outlook of these Credit Ratings (ratings) is stable.

These ratings reflect AVLA’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

AVLA began operations in Chile in 2013 as AVALCHILE, before changing its name to AVLA in 2016. The company is ultimately owned by AVLA Bermuda Holding Corp Ltd., domiciled in Bermuda. AVLA specializes in financial guarantees, credit insurance and surety; it ranks first in Chile in surety and financial guarantees and within the top three in credit insurance, based on market share.

AM Best considers AVLA’s business profile to be neutral. The company has been able to redefine its risk appetite successfully through adverse market conditions. In AM Best’s view, management’s capabilities remain key to adjusting its product offerings amid these evolving market conditions.

AM Best views the company’s operating performance as adequate; results have been favorable during the past three years. The company’s profitable results as of December 2023 were underpinned by revenue from fees for credit studies, tied to credit insurance policies. AM Best will continue to monitor AVLA’s results and underwriting quality as Chile’s economy evolves.

AVLA’s balance sheet strength assessment is strong given its solid capital base for the risks it undertakes, as reflected in its strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). However, financial leverage at its holding company level limits AM Best’s view of the company’s balance sheet strength to the strong level, given the parent’s reliance on the company in terms of revenue and profits. This strong balance sheet strength assessment level also recognizes the willingness and proven history of capital contributions made by its shareholders to support AVLA’s growth, with the latest one taking place in 2023, which was equivalent to USD 1.9 million.

Negative rating actions could take place if AVLA’s market environment limits its operating performance or creates significant volatility in its underwriting metrics, especially if it affects the company’s capital position through continued negative bottom-line results. Positive rating actions could take place if AVLA is capable of showing a stable upward trend in risk-adjusted capitalization, underpinned by consistently positive bottom-line results. Positive rating actions could also take place if financial leverage at holding company levels shows continued improvement, releasing the pressure on holding company influence.

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 .

Key insurance criteria reports utilized:

· Understanding Global BCAR (Version March 7, 2024)

· Available Capital and Insurance Holding Company Analysis (Version Jan. 18, 2024)

· Rating Surety Companies (Version April 25, 2024)

· Scoring and Assessing Innovation (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: April 12, 2023

· Initial Rating Date: Dec. 5, 2018

· Date Range of Financial Data Used: Dec. 31, 2018-Dec. 31, 2023

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

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.

If the ratings referred in this press release do not indicate a specific country suffix, it is understood that they are granted globally and not on a national scale.

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. AM Best keeps certain activities of its business units separate from each other to preserve the independence and objectivity of their respective activities. As a result, certain business units of AM Best may have information that is not available to other AM Best business units. AM Best has established policies and procedures to maintain the confidentiality of certain confidential (non-public) information received in connection with each analytical process. 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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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.

Mexico Chile Latin America Press Release A.M. Best Rating Services, Inc. Bermuda Best's Credit Rating Action

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