MEXICO CITY--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Seguros El Roble, S.A. (El Roble) (Guatemala). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect El Roble’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The stable outlooks reflect AM Best’s expectation that El Roble will continue to perform in a profitable manner while it continues to strengthen its capital base. In addition, the stable outlooks recognize the company’s strategy to prioritize profitability over market share in a competitive marketplace.
El Roble, which was established in 1972, is the largest insurer in Guatemala, with a market share of 22.4%. Its portfolio is composed mainly of non-life products (83%), as of December 2022, with the remainder (17%) tailored for the life insurance market. On a net basis, the accidents and health line of business represents 46% of the company’s premium portfolio, with 29% in property/casualty lines and the remaining 25% in life insurance business. Bicapital Corporation, a Panama-based private financial group that has financial services operations, including banking, insurance, and asset management, in Guatemala, Honduras, El Salvador, the Bahamas, Panama and the United States, owns El Roble. El Roble ranks No. 1 in accidents and health and auto in Guatemala.
AM Best views the company’s business profile as neutral, based on El Roble’s market leadership and its capacity to adjust the terms of its offerings through 2021, while aiming at higher diversification in lines and distribution channels in 2022 and 2023. In addition, El Roble’s market-leading position has allowed it to outperform market growth rates continuously for the past 10 years while sustaining diversification in products and distribution channels.
AM Best’s stable market segment outlook on Guatemala’s insurance industry recognizes the good growth prospects for the country’s economy given its macroeconomic stability; as of December 2022, Guatemala’s USD 1.3 billion insurance market ranked as the third largest in Central America.
El Roble’s balance sheet strength is assessed at the strongest level, as the availability and quality of its capital are well-positioned for the company’s risk profile. In 2022, risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), remained stable as the company continued to post positive net results and making dividend payments. Historically, El Roble’s reinsurance program and ERM capabilities have been effective in protecting its balance sheet.
AM Best assesses El Roble’s operating performance as strong due to its capacity to maintain constant growth in its net income backed by solid underwriting. Strategic adjustments have allowed El Roble to navigate different cycles of the market. AM Best acknowledges that 2023 will be a challenging year with regard to competition, but the company has full capacity to undertake these challenges.
Positive rating actions could take place if El Roble’s balance sheet strength continues to benefit from the consistency in its risk-adjusted capital derived from the company’s prudent capital management.
Negative rating actions could take place if El Roble’s operating performance renders negative results, either from deterioration in underwriting quality or market conditions. Negative rating actions also could take place if AM Best’s assessment of El Roble’s balance sheet strength is impacted unfavorably by macroeconomic conditions that affect the company, its parent or Guatemala.
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