AM Best has affirmed the financial strength rating of A- (excellent) in addition to a long-term issuer credit rating of “a-” (Excellent) of Maxseguros EPM Ltd. (Maxseguros) Bermuda. The outlook of these credit ratings is stable. The ratings reflect Maxseguros’ 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 ratings also reflect Maxseguros’ risk-adjusted capitalisation assessed at the strongest level, as measured by Best’s Capital Adequacy Ratio, and supported by a comprehensive and adequate reinsurance programme, coupled with a conservative investment policy and limited premium risk exposure. The ratings recognise the important role of the company within its corporate parent structure, Empresas Públicas de Medellín E.S.P. (EPM), which is owned by the Colombian municipality of Medellín. EPM is the largest power generation and multiutility company in Colombia. Maxseguros is a single-parent captive insurer wholly owned by EPM and provides reinsurance to the EPM group, covering property damage and business interruption, commercial crime, cyber risk, directors and officers, errors and omissions and general liability exposures. These positive rating factors are offset partially by EPM’s substantial financial leverage and Maxseguros’ limited business and market scope, which is mitigated somewhat by the company’s stable results, favourable geographic spread of risk, and the history of Maxseguros’ growing surplus position, AM Best says. Additionally, while Maxseguros depends on reinsurance, the company’s well-set underwriting and technical capabilities have allowed it to position itself as a key participant within EPM’s reinsurance panel. The stable outlooks are derived from Maxseguros’ role within EPM’s strategy and the financial flexibility derived from its balance sheet strength. AM Best does not foresee positive rating actions at this time. However, negative rating actions could occur if EPM’s credit profile becomes pressured, or if operating performance deteriorates due to increased retention.
