MEXICO CITY--(BUSINESS WIRE)--A.M. Best has assigned a Financial Strength Rating of B++ (Good) and a Long-Term Issuer Credit Rating of “bbb” to Sura Re Ltd. (Sura Re) (Bermuda). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect Sura Re’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
Sura Re is the wholly owned start-up captive reinsurer of Suramericana S.A. (Sura) (Colombia), which in turn is 81.13% owned by Grupo de Inversiones Suramericana S.A. The company was established in Bermuda as a Class 3A insurer in December 2015. Its main purpose is to participate in property business underwritten by Sura’s affiliates across Latin America (Argentina, Brazil, Chile, Costa Rica, El Salvador, México, Panamá, Dominican Republic and Uruguay). A.M. Best recognizes the strategic role that Sura Re will play in Sura’s overall regional strategy; however, Sura Re’s business profile is considered limited given its accessibility to markets when compared with other commercial reinsurers.
Balance sheet strength is considered very strong as risk-adjusted capitalization is more than adequate for the risks the company holds, which will be strengthened further by planned capital contributions during 2018, without dividend payments expected in the medium term. Asset-liability management follows a very conservative investment policy focused on maintaining liquidity to cover its obligations in terms of tenure and currencies. Additionally, ERM is considered appropriate as it is completely supported by Sura’s expertise and management team.
As of December 2017, operating performance still reflects non-recurring expenses related to the company’s start-up nature and dependence on investment income. However, when compared with other start-ups and commercial reinsurers, the captive nature of the company guarantees it a portion of well underwritten risks by its affiliated companies. This provides flexibility in terms of growth and premium risk to efficiently manage its capital and return positions in the future. A.M. Best therefore considers operating performance adequate for the ratings.
Positive rating actions could take place in the medium term if Sura Re is able to achieve its targeted geographic premium distribution with good quality underwriting coupled with a very strong balance sheet assessment. Negative rating actions could take place if the company fails to meet its financial performance to a level that impacts capital and therefore its risk-adjusted capitalization.
A.M. Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.
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:
- Alternative Risk Transfer (ART) (Version Oct. 13, 2017)
- Evaluating Country Risk (Version Oct. 13, 2017)
- Understanding Universal BCAR (Version Oct. 13, 2017)
- Rating New Company Formations (Version Oct. 13, 2017)
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.
- Previous Rating Date: Not Rated.
- Date of Financial Data Used: Dec. 31, 2017.
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