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AM Best Revises Outlooks to Positive for Seguros Suramericana S.A.


AM Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Seguros Suramericana S.A. (Sura) (Panama).

These Credit Ratings (ratings) reflect Sura’s balance sheet strength, which AM Best categorizes as strongest, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.

Sura’s balance sheet strength is underpinned by its risk-adjusted capitalization being at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), supported by a well-structured reinsurance program, synergies provided by Grupo de Inversiones Suramericana S.A. (Grupo Sura), a leading Colombia financial services company in the Latin American insurance, asset management and banking industries, and sound underwriting performance initially driven by its previous integration with Seguros Banistmo, S.A. (Seguros Banistmo) in 2015. Offsetting these positive rating factors is Panama’s highly competitive landscape, which could pressure Sura’s operating performance.

As of year-end 2018, the company was the fourth-largest insurer in Panama, with a market share of 9.72%; 71.3% of its business portfolio is composed non-life products, with life products making up the remaining 28.7%. Sura’s main property/casualty business segment is auto, which represents 36.8% of its gross written premiums.

Grupo Sura’s initiative in 2018 to optimize shareholder value through the merger of intermediate insurance holding companies, Suramericana S.A. and Inversura Panamá Internacional S.A., drove a stock split transaction for its Aseguradora Suiza Salvadoreña S.A. subsidiary. This further enhanced Sura’s risk-adjusted capitalization, which was already at the strongest level.

Sura´s capital base continues to be driven by its value-based management model and is reinforced consistently through profitability and a prudent dividend policy while meeting the group’s 2015 post-merger return on investment goals. Additionally, the company’s balance sheet strength is supported by a comprehensive reinsurance program, set with reinsurers that have excellent security, and the implementation of an internal economic capital model.

Sound underwriting practices, coupled with 2015 post-merger synergies that continue to contain administrative costs, have driven Sura´s strong operating performance as reflected in profitability metrics, characterized by an 81.8% combined ratio at year-end 2018. In addition, the company’s business profile continues to benefit in terms of added diversification and synergies, such as the bancassurance distribution channel.

Positive changes in the ratings or outlooks could occur if the company continues to maintain its post-merger performance and profitability, leading to higher levels of risk-adjusted capitalization. Negative rating actions could result if the expected operating performance deviates considerably and weakens due to Panama’s highly competitive environment, affecting the company’s risk-adjusted capitalization or business profile.

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 Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit www.ambest.com for more information.

Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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