AM Best Affirms Credit Ratings of Solunion Seguros, Compañía Internacional de Seguros y Reaseguros S.A.

AMSTERDAM--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) of Solunion Seguros, Compañía Internacional de Seguros y Reaseguros S.A. (Solunion) (Spain). The outlook of these Credit Ratings (ratings) is stable.

Solunion is the operating holding company of the Solunion group of companies, a 50-50 joint venture between the MAPFRE group and Allianz Trade. Allianz SE is the ultimate parent of Allianz Trade.

The ratings reflect Solunion’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management. The ratings also consider the strategic and operational support Solunion receives from its joint shareholders, including significant reinsurance support in the form of quota share arrangements and excess of loss protection.

Solunion’s balance sheet strength assessment is underpinned by its risk-adjusted capitalisation, which remained at the strongest level as at year-end 2021, as measured by Best’s Capital Adequacy Ratio (BCAR). The balance sheet strength assessment is supported by Solunion’s prudent reserving approach and conservative investment strategy. Solunion is highly dependent on reinsurance, but the associated risk is considered limited, as reinsurance arrangements are solely with the company’s shareholders.

Solunion has generated positive net results consistently over recent years, reporting a five-year weighted average combined ratio of 86.8% and return on equity of 6.7% (2017-2021). In 2021, Solunion reported a net profit before tax of EUR 15.5 million driven by technical profits of EUR 14.6 million, of which EUR 12.6 million corresponds to other technical income, which relates to services fees directly tied to the company's trade credit line of business. Solunion has continued to report positive results as at end of June 2022, improving its operating metrics when compared with the same period in 2021. An offsetting factor is the uncertainty around the sustainability of the trade credit results in light of the challenging economic conditions in the markets where the company operates. However, AM Best note the company’s ability to take prompt risk-mitigating actions on non-performing business when required.

Solunion is a relatively small, albeit growing, credit insurer, reporting gross written premium of EUR 218 million in 2021, with a product offering limited to trade credit and surety lines of business. The company’s market profile is concentrated in Spain, with some geographical diversification as a result of business underwritten in Latin America. Positive business profile factors include the company’s ability to leverage the trade credit expertise and capabilities of Allianz Trade, whilst accessing MAPFRE’s widespread and well-established distribution channels in its target markets.

This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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