AM Best Affirms Credit Ratings of Austral Participações S.A. and Its Subsidiaries
15 Mayo 2024 - 5:24PM
Business Wire
AM Best has affirmed the Financial Strength Rating of A-
(Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR)
of “a-” (Excellent) of Austral Resseguradora S.A. (Austral Re) and
Austral Seguradora S.A. Concurrently, AM Best has affirmed the
Long-Term ICR of “bb+” (Fair) of Austral Participações S.A.
(Austral). The outlook of these Credit Ratings (ratings) is stable.
All companies are domiciled in Brazil, and collectively are
referred to as Austral.
The ratings reflect Austral’s balance sheet strength, which AM
Best assesses as strongest, as well as its adequate operating
performance, neutral business profile and appropriate enterprise
risk management.
The stable outlooks are underpinned by AM Best’s expectation
that Austral’s balance sheet strength assessment will remain at the
strongest level, supported by internal capital generation and
improved risk modeling. At year-end 2023, Austral continued to show
a solid capital structure as shown in its risk-adjusted
capitalization assessed at the strongest level, as measured by
Best’s Capital Adequacy Ratio (BCAR), coupled with positive bottom
line and technical results for each of its subsidiaries.
Additionally, Austral maintains a retrocession program with
highly rated counterparties as it remains dependent on reinsurance
to provide additional market capacity. AM Best expects that
Brazil's double-digit interest rate environment will continue to
increase the contribution of Austral’s investment income to its
operating results, compared with recent years, potentially helping
surplus growth. While a high interest rate environment generally
can be viewed as positive, AM Best recognizes that the high market
reference rates are a consequence of the inflationary environment;
however, the higher rates also contributed to the easing of
inflation-related pressures at year-end 2022 and 2023, and overall,
did not affect the group’s performance.
AM Best views Austral’s business profile as neutral while
recognizing the group’s successful efforts to create a
more-diversified book of business and better geographic spread of
risk over time. Austral continues to grow amid macroeconomic
challenges while building its presence in the wider Latin America
(re)insurance market, predominantly writing energy, surety and
financial guarantee, commercial property/casualty, marine, aviation
and transportation, life and liability (re)insurance lines of
business for the large- and medium-sized commercial segment.
Partially offsetting these positive rating factors is Brazil’s
highly competitive (re)insurance market as homegrown and global
(re)insurers compete for market share. In addition, Austral must
continue to weather the negative impact of catastrophic events that
took place during 2023 such as Hurricane Otis. As of May 2024, the
group expects to overcome the floods that took place in Rio Grande
do Sul supported by its prudent retrocession program put in place
with highly rated reinsures.
Negative rating actions could take place if risk-adjusted
capitalization experiences adverse impact from recent portfolio
changes. While positive rating actions are unforeseen in the short
term, a positive impact on the ratings could take place in the
medium term if the operating performance of the company continues
to strengthen and reduce its volatility.
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.
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Ricardo Rodríguez Financial Analyst +52 55 9085
2708 ricardo.rodriguez@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