A.M. Best Assigns Credit Ratings to Seguros Suramericana S.A.
Salvador Smith, +52 55 1102 2720, ext. 108
Associate Financial Analyst
Alfonso Novelo, +52 55 1102 2720, ext. 107
Senior Director, Analytics
Christopher Sharkey, +1-908-439-2200, ext. 5159
Manager, Public Relations
Jim Peavy, +1-908-439-2200, ext. 5644
Director, Public Relations
A.M. Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of “a-” to Seguros Suramericana S.A. (Sura) (Panama). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect Sura’s good risk-adjusted capitalization supported by a well-structured reinsurance program, parental support provided by Grupo de Inversiones Suramericana S.A. (Grupo Sura), and improved underwriting metrics that continue to be driven from its integration with Seguros Banistmo, S.A. (Seguros Banistmo) in 2015. Offsetting these positive rating factors is Panama’s highly competitive landscape, which could pressure Sura’s operating performance.
As of year-end 2016, the company stood as the fourth-largest insurer in Panama, with a market share of 9%. Sixty-eight percent of its business portfolio is composed of property/casualty (P/C) products, with life products making up the remaining 32%. Its main P/C business segment is auto, which represents 33% of its gross written premiums. The acquisition of Seguros Banistmo was led in 2015 by Grupo Sura, a leading Colombian financial services company in the Latin American insurance, asset management and banking industries. As of 2016, no integration risks derived from the transaction had emerged.
Sura’s risk adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is supportive of the ratings, and the company’s capital base is reinforced mainly through improved profitability. Derived from the group’s post-merger return on investment goals, A.M. Best expects Sura to rely on its value-based management model to support a prudent dividend policy that enables the company to maintain an adequate capital management supportive of current capital adequacy levels. Sura’s balance sheet strength also is supported by a comprehensive reinsurance program set with reinsurers that have excellent security.
Sura’s operating performance further improved in 2016 as a result of the merger with Seguros Banistmo, mainly by taking advantage of synergies that diminished administrative costs, ultimately leading to a combined ratio of 81% at year-end 2016. Moreover, an improvement in the company’s investment results supported positive bottom-line results. In addition, the business profile benefited from the merger in terms of added diversification. In 2017, A.M. Best expects Sura to maintain its current performance by taking advantage of the merger’s business portfolio optimization and synergies, such as the bancassurance distribution channel.
Positive changes in the ratings or outlooks could take place if the company continues to maintain its post-merger performance and profitability, leading to higher levels of risk-adjusted capitalization. Negative rating actions could occur if the expected operating performance deviates considerably and weakens as a result of Panama’s highly competitive environment affecting the company’s risk-adjusted capitalization or business profile.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. 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:
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 Understanding Best’s Credit Ratings.
This press release relates to rating(s) that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page.
A.M. 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. A.M. Best does not audit the company’s financial records or statements, or otherwise independently verify the accuracy and reliability of the information; therefore, A.M. Best cannot attest as to the accuracy of the information provided.
A.M. Best’s credit ratings are independent and objective opinions, not statements of fact. A.M. 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. A.M. 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.
A.M. Best receives compensation for interactive rating services provided to organizations that it rates. A.M. Best may also receive compensation from rated entities for non-rating related services or products offered by A.M. Best. A.M. Best does not offer consulting or advisory services. For more information regarding A.M. Best’s rating process, including handling of confidential (non-public) information, independence, and avoidance of conflicts of interest, please read the A.M. Best Code of Conduct. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper [..].
A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2017 by A.M. Best Rating Services, Inc. and/or its subsidiaries. ALL RIGHTS RESERVED.
Disclaimer: If you have any questions regarding information in this press release please contact the company added in the press release. Please do not contact pr-inside. We will not be able to assist you. PR-inside disclaims the content included in this release.