AM Best Assigns Credit Ratings to AVLA Seguros, S.A. de C.V.

MEXICO CITY--(BUSINESS WIRE)--
AM Best has assigned a Financial Strength Rating of B+ (Good), the Long-Term Issuer Credit Rating of “bbb-” (Good) and the Mexico National Scale Rating (NSR) of “aa-.MX” (Superior) to AVLA Seguros, S.A. de C.V. (AVLA) (Mexico). The outlook assigned to these Credit Ratings (ratings) is stable.

The ratings reflect AVLA’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

AVLA is owned by AVLA S.A. (AVLA S.A.), a Chilean financial holding company engaged in insurance operations in Chile, Peru and Brazil. As of September 2022, AVLA S.A. had equity of USD 52 million and premiums of USD 55.3 million. AVLA Mexico is considered a new company formation as it began operations in October 2021 under a license of "Seguros de Crédito y Caución" (Credit and Surety), and can issue three types of coverages: credit, surety and bonding. The company will target those segments in which the group has regional expertise in surety and credit insurance. Nevertheless, AVLA’s business profile is considered limited, given the high degree of competition in the segment and the notable differences in market dynamics compared with the other regions where the group operates.

The balance sheet strength is considered very strong. The company has deployed its capital cautiously during the first year of operation. However, in order to maintain a capital base to support its desired risk undertakings during this initial growth phase, a substantial capital contribution is needed, which still subjects the company to significant execution risk. AM Best will monitor any capital flows to and from the company to continue assessing the strength of its balance sheet.

The company’s operating performance is considered neutral and line with its position as a recently formed company. AVLA has met its goals during its initial years and targets underwriting experience in line with the market performance. AM Best will continue to monitor the underwriting quality and operating expenses to further assess this building block. AVLA’s ERM assessment is considered appropriate for the company’s risk appetite and strongly supported by the holding company’s back office.

The stable outlooks reflect AM Best's expectation that the company will execute its business strategy as planned.

Negative rating actions could take place if the company’s risk-adjusted capitalization deteriorates due to larger underwriting risks without corresponding available capital to support the current assessment or if there is any deterioration in the available capital given constant losses.

The methodology used in determining these ratings is Best’s Credit Rating Methodology (Version Nov. 13, 2020), which provides a comprehensive explanation of AM Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Key insurance criteria reports utilized:

• Evaluating Country Risk (Oct. 13, 2017)

• AM Best's Ratings On a National Scale (Oct. 13, 2017)

• Available Capital & Holding Company Analysis (Oct. 13, 2017)

• Scoring and Assessing Innovation (Feb. 27, 2023)

• Rating Surety Companies (April 7, 2021)

• Understanding Global BCAR (June 30, 2022)

• Rating New Company Formations (Sept. 9, 2022)

View a general description of the policies and procedures used to determine credit ratings. For information on the meaning of ratings, structure, voting and the committee process for determining the ratings and monitoring activities, please refer to Guide to Best’s Credit Ratings.

• Previous Rating Date: Not rated.

• Date Range of Financial Data Used: December 31, 2021-December 31, 2022

This press release relates to rating(s) that have been published on AM Best's website. For additional 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 AM Best’s Recent Rating Activity web page.

AM Best does not validate or certify the information provided by the client in order to issue a credit rating.

While the information obtained from the material source(s) is believed to be reliable, its accuracy is not guaranteed. AM Best does not audit the company’s financial records or statements, or otherwise independently verify the accuracy and reliability of the information; therefore, AM Best cannot attest as to the accuracy of the information provided.

AM Best’s credit ratings are independent and objective opinions, not statements of fact. AM Best is not an Investment Advisor, does not offer investment advice of any kind, nor does the company or its Ratings Analysts offer any form of structuring or financial advice. AM Best’s credit opinions are not recommendations to buy, sell or hold securities, or to make any other investment decisions. View our entire notice for complete details.

AM Best receives compensation for interactive rating services provided to organizations that it rates. AM Best may also receive compensation from rated entities for non-rating related services or products offered by AM Best. AM Best does not offer consulting or advisory services. For more information regarding AM Best’s rating process, including handling of confidential (non-public) information, independence, and avoidance of conflicts of interest, please read the AM Best Code of Conduct. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2023 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Eli Sanchez
Director, Analytics

+52 55 1102 2720, ext. 122

[email protected]

Alfonso Novelo
Senior Director, Analytics

+52 55 1102 2720, ext. 108

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Christopher Sharkey
Associate Director, Public Relations

+1 908 439 2200, ext. 5159

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Al Slavin
Senior Public Relations Specialist

+1 908 439 2200, ext. 5098

[email protected]

Source: AM Best