A.M. Best has assigned captive reinsurer Sura Re with a financial strength rating of B++ (Good) and a long-term issuer credit rating of “bbb”.
The outlook assigned to these ratings is stable.
As the wholly-owned start-up captive reinsurer of Suramericana (Sura), Sura Re’s main role is to participate in property business written by Sura’s affiliates across Latin America.
The ratings are reflective of Sura Re’s balance sheet strength, categorised as very strong, in addition to its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
Despite the strategic role that it will play in Sura’s overall regional strategy, Sura Re’s business profile is considered limited given its accessibility to markets when compared with other commercial reinsurers.
According to A.M. Best, the reinsurer’s operating performance reflects non-recurring expenses due to the company’s start-up nature and dependence on investment income, but its captive nature guarantees the company with a portion of well-underwritten risks by its affiliated companies.
The rating agency added: “This provides flexibility in terms of growth and premium risk to efficiently manage its capital and return positions in the future.”
Positive rating movement could occur if the captive can achieve its targeted geographic premium distribution with good quality underwriting in combination with a very strong balance sheet assessment.
Failing to perform financially to an extent that leads to an impact in capital and therefore its risk-adjusted capitalisation may lead to negative rating actions.