MEXICO CITY--(BUSINESS WIRE)--AM Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb+” of Worldwide Medical Assurance, Ltd. Corp. (WWMA) (Panama City, Panama).
The Credit Ratings (ratings) reflect WWMA’s balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The outlook revisions to positive follow sustained balance sheet strength underpinned by risk-adjusted capitalization maintained at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), as well as AM Best’s expectations that WWMA’s profitability will continue to help increase the company’s capital base.
The ratings also reflect WWMA’s sustained strong operating performance supported by sound underwriting practices and a conservative investment strategy, while maintaining its successful gradual expansion into other Latin American markets. These strengths are offset by the company’s dependence on its reinsurance counterparties to implement its growth targets and the highly competitive landscape in Latin America’s health and life insurance segments.
The company began operations in 1999 and has since grown successfully in its niche market, providing insurance for clients traveling overseas to receive medical attention. This is done through a mix of brokers, bancassurance and direct distribution channels. WWMA benefits from its partial ownership by KfW DEG, the German development bank, through its holding company, Worldwide Group, Inc. WWMA’s model of optimizing the selection of medical care providers with support of highly rated reinsurance counterparties also have provided benefits. In recent years, WWMA has expanded operations into other Latin American markets such as Guatemala, Bolivia and Paraguay.
Historically, WWMA has maintained positive capital-creation capacity, which along with a conservative strategy of reinvesting profits, has contributed to its sound risk-adjusted capitalization. Capital management is strengthened further by the use and development of WWMA’s economic capital model, ERM practices and improved diversification among highly rated reinsurers in 2018.
WWMA’s strong underwriting, risk retention and stringent expense practices translate into strong premium sufficiency metrics. Moreover, WWMA’s synergies with its sister company in the Dominican Republic in conjunction with periodic adjustments to its reinsurance structure have helped to optimize the company´s underwriting. These measures, combined with stable financial products, have resulted in sustained profitability indicators, such as return on equity and return on assets, which were 11.1% and 3.6%, respectively, at year-end 2018.
Factors that could lead to positive rating actions include sustained stable operating performance, the continuation in the midterm of its growing capital base supportive of a very strong balance sheet strength and successful consolidation of company operations in targeted locations while maintaining diversification among highly rated reinsurers. Negative rating actions are not expected in the short term, unless significant changes in the company’s strategy damage its income-generating profile or if there is material deterioration of current capital adequacy.
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