A.M. Best has affirmed the financial strength rating of A- (excellent) and the long-term issuer credit rating of “a-” of Maxseguros EPM (Maxseguros) (Bermuda). The outlook of these credit ratings (ratings) is stable.
The ratings recognise the important role of the company within its corporate parent structure, Empresas Públicas de Medellin E.S.P. (EPM), which is owned by the Colombian municipality of Medellin.
EPM is the largest power generation and multi-utility company in Colombia. Maxseguros is a single-parent captive insurer wholly owned by EPM and provides reinsurance to the EPM group.
A.M. Best categorised Maxseguros’ balance sheet as strongest, strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
The ratings also reflect Maxseguros’ strong risk-adjusted capitalisation, supported by a comprehensive and adequate reinsurance program coupled with conservative investment policy and limited premium risk exposure.
These positive rating factors are offset partially by EPM’s substantial financial leverage and Maxseguros’ limited business and market scope, which is somewhat mitigated by the company’s stable results, favourable geographic spread of risk and the history of Maxseguros’ growing surplus position.
Positive rating triggers could include sustained positive operating results and improved risk-adjusted capitalisation, as well as excellent claim management.
Negative rating actions could also arise if underwriting performance presents volatility affecting earnings and capitalisation over time, or if there is a material shift in risk profile that potentially could undermine the stability and profitability of the company.
AM Best has a favourable view of Maxseguros’ overall profile within the ultimate parent’s structure; however, EPM’s credit profile and financial leverage remain key factors for future reviews on Maxseguros.