Fitch Affirms Maxseguros EPM Re Ltd. IFS Rating at 'BBB+'; Outlook Stable

SAO PAULO--()--Fitch Ratings has affirmed the 'BBB+' Insurer Financial Strength (IFS) rating for Maxseguros EPM Re LTD (Maxseguros). The Rating Outlook is Stable.

KEY RATING DRIVERS

Maxseguros' rating is in line with that of its parent's rating -- Empresas Publicas de Medellin S.A. E.S.P. (EPM) -- given the methodological approach of captive subsidiaries, where Fitch Ratings categorizes Maxseguros as a core captive reinsurance company. EPM has an international local currency rating of 'BBB+' with a Stable Outlook.

Maxseguros is a core captive reinsurance company to EPM due to its strategic importance in managing the risks and structuring the insurance coverage of EPM Group. The support of the shareholder is evidenced by the formal support in managing the investment portfolio of the captive; the provision of resources for the optimal operation and the transference of strong corporate governance practices.

Maxseguros is a captive reinsurer domiciled in Bermuda that only engages in reinsuring the risks of EPM and the subsidiaries in which it has controlling interest. Maxseguros controls EPM's insurance programs and plays an important role in the strategic plan of EPM to seek optimum retentions and to have a better control of its risks and exposures.

Maxseguros has not only provided financial efficiencies in the insurance strategy of EPM group, it has also provided technical optimization in the insurance program. The reinsurance company has improved deductibles and increased coverage in EPM's subsidiaries.

Maxseguros's capital has strengthened in the last five years. The total capital was USD 40.6 million as Sept. 30, 2015 vs USD 3.06 million as Dec. 31, 2010. This trend is favored by the positive internal capital generation and the profit reinvestment policy. Additionally, during 2015 the equity increased due to the capitalization of USD 10 million, coming from the EPM's self-insurance fund.

RATING SENSITIVITIES

Key Negative changes to EPM's ratings or to its ability and willingness to provide support could result in a downgrade for Maxseguros. However, Fitch views the latter as unlikely.

Fitch may consider an upgrade of Maxseguros' rating if EPM's rating is upgraded.

Additional information is available on www.fitchratings.com

Applicable Criteria

Insurance Rating Methodology (pub. 16 Sep 2015)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=871172

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form
https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=998817

Solicitation Status
https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=998817

Endorsement Policy
https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Contacts

Fitch Ratings
Primary Analyst:
Esin Celasun, +5521 4503 2626
Fitch Ratings Brasil Ltda.
Praca XV de Novembro 20, Sala 401 B, Centro
Rio de Janeiro 20010-010
or
Secondary Analyst:
Milena Carrizosa, +57 1 307-5180 ext 1090
Director
or
Committee Chairperson:
Donald Thorpe, CPA, CFA, +1-312-606-2353
Senior Director
or
Media Relations:
Elizabeth Fogerty, +1-212-908-0526
New York
elizabeth.fogerty@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst:
Esin Celasun, +5521 4503 2626
Fitch Ratings Brasil Ltda.
Praca XV de Novembro 20, Sala 401 B, Centro
Rio de Janeiro 20010-010
or
Secondary Analyst:
Milena Carrizosa, +57 1 307-5180 ext 1090
Director
or
Committee Chairperson:
Donald Thorpe, CPA, CFA, +1-312-606-2353
Senior Director
or
Media Relations:
Elizabeth Fogerty, +1-212-908-0526
New York
elizabeth.fogerty@fitchratings.com