OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has removed from under review with negative implications and affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Ratings of “bbb+” of the members of Multinational Insurance Company (Multinational) (Hato Rey, Puerto Rico). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings were placed under review with negative implications on Oct. 13, 2017, following the release of the updated Best’s Credit Rating Methodology (BCRM). The ratings have been removed from under review, as A.M. Best has completed its analysis of Multinational under the updated BCRM.
The ratings reflect Multinational’s balance sheet strength, which A.M. Best categorizes as strong, as well as its marginal operating performance, limited business profile, appropriate enterprise risk management (ERM) and rating lift from its parent company.
Multinational’s balance sheet strength is supported by the strong level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), reflective of its comprehensive reinsurance program and prudent investment risk profile. Additionally, solid liquidity measures are enhanced by a generally positive operating cash flow, which is somewhat offset by adverse loss reserve development in four straight calendar years, primarily driven by the commercial multi-peril line of business. Multinational’s operating performance on a five-year average basis is marginal, with key operating metrics that lag its peer averages along with the company’s combined ratio. However, net income has been generated in three straight years (2015-2017), largely driven by solid net investment income and other income, either complementing or offsetting variable net underwriting results. The company anticipates positive net income in 2017 despite two major hurricanes (Irma and Maria) striking Puerto Rico.
Multinational’s business profile is limited due to its geographical concentration in Puerto Rico, which exposes results to weather-related events and regulatory challenges. The company’s market position is supported by a solid and tenured management team with a long-standing track record. The company also benefits from appropriate ERM, including a developed risk management framework and comprehensive reinsurance program. Lastly, Multinational receives rating support from its parent company, Aseguradora Ancón SA, based on historical capital and operational support.
This press release relates to Credit Ratings 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 see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.