AM Best Affirms Credit Ratings of AVLA Per? Compa??a de Seguros S.A.

BY Business Wire | CORPORATE | 06/14/24 05:16 PM EDT

MEXICO CITY--(BUSINESS WIRE)-- AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of ?bbb? (Good) of AVLA Per? Compa??a de Seguros S.A. (AVLA) (Lima, Peru). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect AVLA?s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

The stable outlooks reflect AM Best?s expectation that the company will continue to adjust to the market conditions profitably while maintaining sound capitalization.

AVLA is a Peru-based property/casualty insurer that began operations in 2015. The company specializes in surety, and complimentary lines of credit insurance and engineering, with the recent addition of a property line, in September 2023; AVLA remains in the top 10 among non-life carriers in Peru and top three in the country?s surety segment, based on market share.

AM Best views AVLA?s business profile as neutral. Since its creation in 2015, AVLA has capitalized successfully on Peru?s guarantee market, which has limited capacity, and become one of the country?s main participants for credit insurance and surety. AM Best?s neutral assessment of the company?s business profile reflects the size of its operation within a small segment in Peru, which currently is in Country Risk Tier 3, per AM Best?s country risk evaluation.

AM Best considers the company?s operating performance to be adequate. AVLA has been able to promote its products in a profitable manner and maintain adequate underwriting performance since 2017, taking proactive steps to manage claims due to market events and developing alternatives for revenue. AVLA?s technical results has been complemented by an active investment strategy that generated good investment results in 2023.

AVLA?s balance sheet strength assessment is very strong given its solid capital base for the risks it undertakes, as reflected in its strongest level of risk-adjusted capitalization, as measured by Best?s Capital Adequacy Ratio (BCAR). The very strong balance sheet strength assessment also recognizes the company?s capital management capabilities and shareholders? willingness and proven history of making capital contributions to support AVLA?s growth. A panel of reinsurers supports AVLA?s balance sheet strength level with excellent security. Limiting AVLA?s ratings is the potential pressure of the high financial leverage present in its ultimate parent company, AVLA Bermuda Holding Corp Ltd.

Negative rating actions could take place if the financial leverage at the holding company deteriorates or if there are capital outflows to AVLA?s holding company, AVLA Bermuda Corp Ltd., which weaken AVLA?s risk-adjusted capitalization to a level that no longer supports the current rating. Positive rating actions could take place if AVLA is able to maintain a stable upward trend in risk-adjusted capitalization, underpinned by positive bottom-line results. If the financial leverage at the holding company improves, it could potentially relieve the drag, prompting positive rating actions. Negative rating actions could occur if the perception of country risk by AM Best changes, negatively impacting the balance sheet strength of the company.

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.

Copyright ? 2024 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Source: AM Best

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