28 August 2018Actuarial & underwriting

AM Best gives Excellent rating to Colombia energy captive

Ratings agency AM Best has affirmed the financial strength rating of A- (Excellent) of Maxseguros EPM (Bermuda), the single-parent captive insurer wholly owned by EPM, Colombia's largest power generation and multi-utility company.

Maxseguros' ratings reflect its balance sheet strength, which AM Best categorises as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

The ratings also reflect Maxseguros’ strong risk-adjusted capitalization, supported by a comprehensive and adequate reinsurance program coupled with conservative balance sheet strategies, as conservative investment policy and limited premium risk exposure.

AM Best also recognises the support of its parent, Empresas Publicas de Medellin (EPM), owned by the Colombian municipality of Medellin. Maxseguros covers property damage and business interruption, commercial crime, directors and officers and construction liability exposures.

Partially offsetting these positive rating factors are  Maxseguros’ limited business and market scope, which is somewhat mitigated by the company’s stable results, favorable geographic spread of risk and the history of Maxseguros’ growing surplus position, as well as the support of its ultimate parent, EPM. Additionally, while Maxseguros depends on reinsurance, EPM’s senior management is involved intimately in the captive’s operations.

The outlook of these ratings is stable, and is derived from  Maxseguros’ ability to sustain a strong level of operating performance due to its demonstrated risk management expertise and conservative underwriting criteria.

In 2016 and 2017, the company presented net claims while producing constant positive bottom line results. AM Best has a favourable view of Maxseguros’ overall profile within the ultimate parent’s structure and recognizes the benefits inured from this. Particular attention is paid to EPM senior management’s active involvement.