22 March 2018Bermuda analysis

Sura Re gets stable rating from AM Best


AM Best has assigned a financial strength rating of B++ (Good) and a long-term issuer credit rating of “bbb” to Sura Re (Bermuda). The outlook assigned to these ratings is stable.

Sura Re is the wholly owned start-up captive reinsurer of Suramericana (Colombia), which in turn is 81.13 percent owned by Grupo de Inversiones Suramericana.

According to AM Best the ratings reflect Sura Re’s balance sheet strength, which the rating agency categorises as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

The company was established in Bermuda as a Class 3A insurer in December 2015. Its main purpose is to participate in property business underwritten by Sura’s affiliates across Latin America (Argentina, Brazil, Chile, Costa Rica, El Salvador, México, Panamá, Dominican Republic and Uruguay). AM Best recognises the strategic role that Sura Re will play in Sura’s overall regional strategy; however, Sura Re’s business profile is considered limited given its accessibility to markets when compared with other commercial reinsurers.

Balance sheet strength is considered very strong as risk-adjusted capitalisation is more than adequate for the risks the company holds, which will be strengthened further by planned capital contributions during 2018, without dividend payments expected in the medium term. Asset-liability management follows a very conservative investment policy focused on maintaining liquidity to cover its obligations in terms of tenure and currencies. Additionally, ERM is considered appropriate as it is completely supported by Sura’s expertise and management team.

As of December 2017, operating performance still reflects non-recurring expenses related to the company’s start-up nature and dependence on investment income. However, AM Best said that when compared with other start-ups and commercial reinsurers, the captive nature of the company guarantees it a portion of well underwritten risks by its affiliated companies. This provides flexibility in terms of growth and premium risk to efficiently manage its capital and return positions in the future. AM Best therefore considers operating performance adequate for the ratings.

Positive rating actions could take place in the medium term if Sura Re is able to achieve its targeted geographic premium distribution with good quality underwriting coupled with a very strong balance sheet assessment. Negative rating actions could take place if the company fails to meet its financial performance to a level that impacts capital and therefore its risk-adjusted capitalisation.


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