CONTACTS:
FOR IMMEDIATE RELEASE
MEXICO CITY - JULY 19, 2024 04:52 PM (EDT)
AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of B+ (Good), the Long-Term Issuer Credit Rating of “bbb-” (Good) and the Mexico National Scale Rating (NSR) of “aa-.MX” (Superior) of AVLA Seguros, S.A. de C.V. (AVLA) (Mexico). Concurrently, AM Best has withdrawn these Credit Ratings (ratings) as the company has requested to no longer participate in AM Best’s interactive rating process.
This final rating update was completed after the company requested to no longer participate in the rating process.
The ratings reflect AVLA’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
AVLA is owned by AVLA Bermuda Holding Corp Ltd. (AVLA Bermuda), a financial holding company engaged in insurance operations in Chile, Peru and Brazil. As of December 2023, AVLA Bermuda had equity of USD 93.9 million and generated premiums of USD 129 million. AVLA is considered a new company formation as it began operations in October 2021 under a license of “Seguros de Crédito y Caución” (Credit and Surety), and can issue three types of coverages: credit, surety and bonding. The company will target those segments in which the group has regional expertise in surety and credit insurance. Nevertheless, AVLA’s business profile is considered limited, given the high degree of competition in the segment and the notable differences in market dynamics compared with the other regions where the group operates.
AVLA’S balance sheet strength is assessed at the strong level. The company has deployed its capital cautiously during the first year of operation; however, growth in 2023 has placed pressure on company’s Best’s Capital Adequacy Ratio (BCAR), which could further affect its balance sheet strength assessment, if not supported by capital growth.
The company’s operating performance is considered neutral and in line with its position as a recently formed company. AVLA has met its goals during its initial years and targets underwriting experience that aligns with market performance. AVLA’s ERM assessment is considered appropriate for the company’s risk appetite and strongly supported by the holding company’s back office.
The negative outlooks reflect AM Best’s concerns on risk-adjusted capitalization if the company continues to grow without any further capital contributions. Nevertheless, the group has demonstrated a policy to deploy capital to support the growth of its operations in the regions it participates.
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 (June 6, 2024)
· Best’s National Scale Ratings (May 16, 2024)
· Available Capital and Insurance Holding Company Analysis (Jan. 18, 2024)
· Scoring and Assessing Innovation (Feb. 27, 2023)
· Rating Surety Companies (April 25, 2024)
· Understanding Global BCAR (March 7, 2024)
· Rating New Company Formations (April 25, 2024)
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 27, 2023
· Initial Rating Date: April 27, 2023
· Date Range of Financial Data Used: December 31, 2021-December 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.