AM Best Revises Outlooks to Stable for Abarca – Companhia de Seguros S.A.
AM Best has revised the outlooks to stable from negative and affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” (Good) of Abarca -
The Credit Ratings (ratings) reflect Abarca’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and marginal enterprise risk management.
The revision of the outlooks to stable follows management actions taken during 2021 to reduce gross and net underwriting limits and tighten reinsurance purchasing practices. These management actions have alleviated pressure on Abarca’s balance sheet strength assessment.
The balance sheet strength assessment of strong reflects the company’s strongest risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), and conservative and liquid investment portfolio. Offsetting factors include Abarca’s high dependence on reinsurance and uncertainty surrounding the sufficiency of loss reserves given a relatively short loss history. In addition, the company’s small capital base exacerbates the sensitivity of its solvency position to stressed scenarios and variations in future performance.
The adequate operating performance assessment is based on AM Best’s expectation of Abarca’s good prospective earnings generation. In 2019, Abarca generated a net profit of
Abarca’s limited business profile assessment reflects its position as a small monoline insurer, focusing entirely on surety insurance in
This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. 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.
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Source: AM Best
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