LONDON--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating of A (Excellent) and the issuer credit rating of “a+” of Ocaso, S.A. Seguros y Reaseguros (Ocaso) (Spain). The outlook for both ratings is stable.
The ratings reflect Ocaso’s excellent risk-adjusted capitalisation and stable operating performance. Offsetting rating factors are the company’s almost exclusive focus in its domestic market and the negative underwriting profits in its life insurance portfolio.
Ocaso’s balance sheet strength remains at an excellent level. Capital and surplus has increased at an average annual rate of 8.5% between 2010- 2014, supported by strong internal capital generation. Operating profits have remained stable during the period and the company has produced combined ratios consistently below 85%.
The company maintains a well-established competitive position in Spain with approximately 97% of its underwriting revenue sourced from the domestic market. Additionally, underwriting results of the life portfolio have been affected in 2013 and 2014 by lower-than-forecast returns on its invested asset base as a result of the low interest rate environment. Currently, life technical provisions represent 43% of its total insurance liabilities, and life revenues account for 16% of its total insurance income.
Positive rating actions could occur over the long term if Ocaso were to generate stable underwriting performance in both its life and non-life operations whilst maintaining risk-adjusted capitalisation at an excellent level.
Negative rating actions could occur if operating performance were to deteriorate to a level that does not meet A.M. Best expectations.
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 utilised:
- Catastrophe Analysis in A.M. Best Ratings
- Evaluating Non-Insurance Ultimate Parents
- Rating Members of Insurance Groups
- Risk Management and the Rating Process for Insurance Companies
- Understanding Universal BCAR
In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.
This press release relates to rating(s) that have been published on A.M. Best's website. For all 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 visit A.M. Best’s Ratings & Criteria Center.
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