AM Best affirms rating of Suramericana captive

AM Best has affirmed the financial strength rating of B++ and the long-term issuer credit rating of “bbb” of Sura Re. The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Sura Re’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).

Sura Re is the wholly owned captive reinsurer of Suramericana (Sura), which in turn is 81.1% owned by Grupo de Inversiones Suramericana. The company was established in Bermuda as a Class 3A insurer in December 2015, and in April 2022 received approval from the regulator to operate as a Class C insurer.

Sura Re’s main purpose is to participate in property business underwritten by its parent’s affiliates across Latin America (i.e., Chile, Colombia, México, Panama and Dominican Republic) to help the group achieve its strategic regional goals. AM Best said that it recognises the greater relevance that Sura Re is aiming to achieve in Suramericana’s overall regional strategy.

AM Best assesses the company’s balance sheet strength as very strong, as its risk-adjusted capitalisation, as measured by Best’s capital adequacy ratio, is more than adequate for the risks it holds. During 2022, capital requirements continued to reflect higher premium risk as the company executes its strategy and retains a higher portion of risks; going forward, AM Best expects Sura Re’s capital requirements to increase due to a larger deployment of its capital while supporting its current very strong level assessment of risk-adjusted capitalisation. The company’s asset-liability management follows a very conservative investment policy focused on maintaining liquidity to cover Sura Re’s obligations in terms of tenure and currencies.

At December 2022, the company reported positive net profit for the fourth consecutive year since its inception. Operative performance was strongly driven by technical results, backed by good underwriting practices and strong fee income. AM Best remains attentive to macroeconomic conditions and its impact on the company’s investment results. The captive nature of the company within the third largest insurance group in Latin America provides flexibility in terms of growth and premium risk to manage its capital and return positions efficiently in the future. AM Best therefore considers operating performance to be adequate for the current ratings.