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AM Best Upgrades Credit Rating Agency of Aseguradora General, SA

AM Best Upgrades Credit Rating Agency of Aseguradora General, SA

MEXICO CITY, July 10, 2024–(WORK WIRE)–AM The Best It upgraded the Long-Term Issuer Credit Rating (Long-Term ICR) from ‘bbb’ (Good) to ‘bbb+’ (Good) and affirmed the Financial Strength Rating (FSR) of Aseguradora General, SA (AGen) (Guatemala) at B++ (Good). Additionally, AM Best revised the Long-Term ICR to stable from positive. The outlook for the FSR is stable.

Credit Ratings (ratings) reflect AGen’s balance sheet strength, marginal operating performance, neutral business profile and appropriate enterprise risk management (ERM), which AM Best assesses as the strongest.

The upgrade to the Long-Term ICR is due to the removal of the burden on AGen’s ratings due to the significant reduction in financial leverage at the holding company and adequate coverage of interest expense.

AGen was founded in 1967 and is the seventh largest insurer operating in Guatemala. As of year-end 2023, the company reported direct premiums of $81 million with a market share of 6.5%. The company undertakes a mixed portfolio of life and non-life businesses with retained premiums distributed among major medical expenses (59%), auto (15%), life (16%) and the remainder property/casualty (P/C). The company’s business profile is rated neutral, supported by its importance in its home market, but limited by geographic and product concentration.

The company’s majority shareholder is a pure holding company privately held by investors who purchased a 51% stake in the company from Assicurazioni Generali SpA in May 2017.

AM Best’s outlook for Guatemala is stable, reflecting the country’s economic resilience and ability to provide a stable base for future growth for insurers.

AM Best believes AGen’s balance sheet strength is at its strongest. The company’s well-established reinsurance program supports its capital base by appropriately limiting its exposure to catastrophic events. In previous rating reviews, the conglomerate’s debt obligations have negatively weighed on AGen’s ratings, limiting its financial flexibility due to significant dividend payments; however, debt has shifted to more manageable levels with good interest coverage, supporting an upgrade to the Long-Term ICR. AM Best believes AGen’s ERM practices are appropriate because its management capabilities are sufficient to meet risk appetite.

AM Best views the company’s operating performance as marginal. The published result for 2023 reflects the company’s improved underwriting performance in certain lines, while challenges remain in competitive insurance segments and expense management. AM Best also acknowledges the positive development in AGen’s property/casualty businesses, but this was not enough to create a positive trend in 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 2022 results.

Positive rating actions may be taken if the company’s operating performance trends positively due to improvements in underwriting quality. Negative rating actions may be taken if the company’s business profile limits its operating performance in terms of underwriting quality and net results.

This press release relates to Credit Ratings published on AM Best’s website. For all rating information and related disclosures related to the release, including office details, The person responsible for publishing each individual rating referenced in this newsletter please contact AM Best Last Rating Event For additional information regarding the use and limitations of Credit Rating opinions, please see: Guide to Best’s Credit ScoresFor 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 see: Guide to Proper Use of Best’s Ratings and Reviews.

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 operates in more than 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit: www.ambest.com.

Copyright © 2024 AM Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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