AM Best Upgrades Issuer Credit Rating of Aseguradora General, S.A.
July 10 2024 - 1:52PM
Business Wire
AM Best has upgraded the Long-Term Issuer Credit Rating
(Long-Term ICR) to “bbb+” (Good) from “bbb” (Good) and affirmed the
Financial Strength Rating (FSR) of B++ (Good) of Aseguradora
General, S.A. (AGen) (Guatemala). In addition, AM Best has revised
the Long-Term ICR to stable from positive. The outlook of the FSR
is stable.
The Credit Ratings (ratings) reflect AGen’s balance sheet
strength, which AM Best assesses as strongest, as well as its
marginal operating performance, neutral business profile and
appropriate enterprise risk management (ERM).
The upgrade of the Long-Term ICR emanates from the removal of
the drag on AGen’s ratings, as financial leverage at the holding
company has diminished substantially with sufficient interest
expense coverage.
AGen was established in 1967 and is the seventh-largest insurer
operating in Guatemala. As of year-end 2023, the company reported
USD 81 million in direct premium, with a market share of 6.5%. The
company underwrites a mixed portfolio of life and non-life
business, with its retained premium distributed among major medical
expenses (59%), auto (15%), life (16%) and the rest, a mix of
property/casualty (P/C). The company’s business profile is assessed
at neutral, supported by its importance within its domestic market,
but limited by its geographic and product concentration.
The company’s majority shareholder is a pure holding company
privately held by investors that bought a 51% stake of the company
in May 2017 from Assicurazioni Generali S.p.A.
AM Best has a stable outlook on Guatemala, which reflects the
economic resiliency of the country and its ability to provide
stable ground for future growth of insurance companies.
AM Best considers AGen’s balance sheet strength to be at the
strongest level. The company’s well-structured reinsurance program
supports its capital base by properly limiting its exposure to
catastrophe events. In previous rating assessments, the holding’s
debt obligations placed negative pressure on AGen’s ratings by
limiting its financial flexibility due to substantial dividend
payments; however, debt has shifted to more manageable levels with
good interest coverage supporting the upgrade of the Long-Term ICR.
AM Best considers AGen’s ERM practices to be appropriate as its
management capabilities are sufficient to meet its risk
appetite.
AM Best views the company’s operating performance as marginal,
The result posted for 2023 reflects the company’s improved
underwriting in particular lines, while challenges still persist in
its competitive insurance segments as well as in expense
management. AM Best also recognizes the positive development of
AGen’s property/casualty lines of business; however, this has not
been sufficient to generate a favorable trend in its underwriting
results to support a higher operating performance assessment level.
Net income has remained positive for the past five years; however,
2023 results are lower than those of 2022.
Positive rating actions could take place if the operating
performance of the company trends positively due to underwriting
quality improvements. Negative rating actions could take place if
the company’s business profile limits its operating performance in
terms of quality of underwriting and bottom-line results.
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.
AM Best is a global credit rating agency, news publisher and
data analytics provider specializing in the insurance industry.
Headquartered in the United States, the company does business in
over 100 countries with regional offices in London, Amsterdam,
Dubai, Hong Kong, Singapore and Mexico City. For more information,
visit www.ambest.com.
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Eli Sanchez Director, Analytics +52 55 9085
7503 eli.sanchez@ambest.com Alfonso Novelo Senior
Director, Analytics +52 55 9085 7501
alfonso.novelo@ambest.com Christopher Sharkey Associate
Director, Public Relations +1 908 882 2310
christopher.sharkey@ambest.com Al Slavin Senior Public
Relations Specialist +1 908 882 2318
al.slavin@ambest.com