A.M. Best Affirms Credit Ratings of J.Malucelli Resseguradora S.A. and J.Malucelli Seguradora S.A.

Business Wire

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Ratings of “a-” of J.Malucelli Resseguradora S.A. (J.Malucelli Re) and J.Malucelli Seguradora S.A. (J.Malucelli Seg) (collectively referred to as J.Malucelli). The outlook of these Credit Ratings (ratings) is stable. Both companies are domiciled in Brazil.

The ratings reflect J.Malucelli’s balance sheet strength, which A.M. Best categorizes as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. J.Malucelli Re is classified as a local reinsurer in Brazil and mainly operates as a captive reinsurer for J.Malucelli Seg, an organization that has been writing surety directly for more than 20 years. J.Malucelli Seg is the market-facing entity and a leading surety writer in Brazil, and also writes the DPVAT (motor third-party liability) compulsory auto insurance as part of a pool of insurers. J.Malucelli benefits operationally from its minority shareholder, The Travelers Companies, Inc. (ownership is 49.5%). These benefits include collaboration on enterprise risk management, employee development, retrocession placement, claims handling, business development and other operational functions. J.Malucelli maintains low underwriting leverage and strong liquidity metrics, with a comprehensive retrocession program that provides additional capacity and reduces the company’s overall exposure.

Partially offsetting these positive rating factors is J.Malucelli’s concentration risk as essentially a mono-line surety writer with business concentration in a single country. J.Malucelli’s future plans to mitigate this risk include expansion into related lines of business and geographic diversification into other parts of Latin America. Additionally, Brazil’s (re)insurance market continues to be highly competitive, with home-grown and global (re)insurers vying for market share. Despite Brazil’s economy showing initial signs that the economic recession is ending, companies are seeking international expansion while keeping an eye on the growth opportunities in the domestic insurance market. Surety remains as one of the fastest-growing segments in the (re)insurance industry in Brazil.

Factors that could lead to positive rating action include successful long-term execution of J.Malucelli’s growth and diversification plan and consistent operating performance while maintaining its robust risk-adjusted capitalization. Negative rating triggers include deterioration in operating results or risk-adjusted capitalization, the inability to execute its growth and diversification strategy, a continued weakness in Brazil’s economy or a downgrade in Brazil’s country risk tier.

This press release relates to Credit Ratings that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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A.M. Best

Guilherme (Guy) Monteiro Simoes
Senior Financial Analyst

+1 908 439 2200, ext. 5301

guy.simoes@ambest.com

or

Scott Mangan
Associate Director

+1 908 439 2200, ext. 5593

scott.mangan@ambest.com

or

Christopher Sharkey
Manager, Public Relations

+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.com

or

Jim Peavy
Director, Public Relations

+1 908 439 2200, ext. 5644

james.peavy@ambest.com