A.M. Best Assigns Credit Ratings to Abarca – Companhia de Seguros, SA
The ratings reflect Abarca’s balance sheet strength, which
Limiting the ratings is the inherent uncertainty surrounding the execution of Abarca’s business plan as the company is in a start-up phase, having registered with the Portuguese regulator in
Abarca has a limited, albeit niche business profile as a monoline insurer, focusing entirely on surety insurance predominantly within
Based on Abarca’s business plan, risk-adjusted capitalisation, as measured by the Best’s Capital Adequacy Ratio (BCAR) model, is projected to remain at the strongest level through the start-up phase, supported by good internal capital generation as regulation prevents the company from declaring any dividends for the first three years of operation. The company’s balance sheet strength is further supported by a conservative investment profile and excellent liquidity position, as all investments are held in cash, and the absence of borrowings. Offsetting rating factors include Abarca’s high dependence on reinsurance, uncertainty surrounding the sufficiency of its loss reserves in the absence of loss history, and the small capital base relative to the high risk surety business underwritten.
The company’s operating performance is considered adequate based on A.M. Best’s expectation of stable prospective earnings. Given the extensive reinsurance arrangements in place,
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
Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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Jessica Botelho, CA, +44 20 7397 0310
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