OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has removed from under review with negative implications and affirmed the Financial Strength Rating of A- (Excellent) and Long-Term Issuer Credit Ratings of “a-” of Triple-S Propiedad, Inc. (Triple-S) (Guaynabo, 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 Triple-S under the updated BCRM.
The ratings reflect Triple-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).
Triple-S’ balance sheet strength is supported by the very strong level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), reflective of its moderate underwriting leverage, comprehensive reinsurance program, stable loss reserving trends and its prudent investment risk profile. Additionally, solid liquidity measures are enhanced by a positive operating cash flow, which is somewhat offset by an elevated common stock leverage and stockholder dividend requirement.
Triple-S’ operating performance is categorized as adequate, with key operating and underwriting metrics that outperform its peer averages. However, the company does have an elevated underwriting expense ratio largely driven by commission expense, which is nearly double that of its industry composite, but is considered typical of a carrier in the Puerto Rico property/casualty market. Positive net income was reported in 2017 despite two major hurricanes (Irma and Maria) impacting Puerto Rico.
Triple-S’ business profile is limited due to its geographical concentration in Puerto Rico, which exposes results to weather-related events, overall macro-economic conditions on the island and to regulatory/competitive market challenges. The company’s market position is supported by a tenured management team with a long-standing track record. A.M. Best acknowledges the appropriate ERM program for the Triple-S organization as a formalized process with risk identification, management and mitigation. The company has done well with the operational disruption following the two major hurricanes affecting the island, both immediately after the storms and in the months that followed.
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