In a release on
The ratings of SCO and SB reflect their strong risk-adjusted capitalisation, stable underwriting performance and established competitive positions in the domestic insurance market.
SCO and SB's stand-alone risk-adjusted capitalisation remains supportive of their ratings due to their strong earnings generation. In addition, both entities benefit from the strong financial flexibility of GCO, where group capital is held and deployed as required across its subsidiaries. GCO's consolidated risk-adjusted capitalisation is maintained at an excellent level.
Despite the challenging economic conditions in Spain and the subsequent tightening in underwriting margins, SCO and SB's stand- alone operating performance remains strong, as demonstrated by their five-year average return on capital and surplus of 36 percent and 28 percent, respectively. Prudent underwriting guidelines and limited natural catastrophe exposures, due to the existence of the national government's scheme covering catastrophes (Consorcio de Compensacion de Seguros) have resulted in relatively stable and consistent technical profits for both companies, with a combined ratio of less than 90 percent over the last five years.
A partly offsetting factor is the size of SCO and SB relative to the more dominant players in the market. The companies reported gross written premium of
There are currently no upwards rating pressures. Negative ratings actions could occur if operating performance or consolidated risk- adjusted capitalisation were to deteriorate to a level that does not meet
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