MEXICO CITY--(BUSINESS WIRE)--AM Best has assigned a Financial Strength Rating of B++ (Good) and a Long-Term Issuer Credit Rating of “bbb+” (Good) to AVLA Re Ltd. (AVLA Re) (Bermuda). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings of AVLA Re reflect its 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).
AVLA Re is ultimately owned by AVLA Bermuda Holding Corp Ltd. (ABHC), a financial holding company domiciled in Bermuda, engaged in insurance operations in Chile, Peru, Mexico and Brazil. As of June 2024, ABHC had equity of USD 83 million.
AVLA Re is considered a new company as it began operations in January 2022, under a Class 3A insurer license in Bermuda. The company currently reinsures business from other ABHC subsidiaries, in Chile, Peru, Mexico and Brazil, and plans for the medium to long term to reinsure premiums from third parties. AVLA Re’s business profile is considered limited, given the small size of the company and its high degree of competition.
The balance sheet strength is considered very strong. AVLA Re has received two capital infusions from its holding company since its creation. AM Best will monitor any capital flows to and from the company to continue assessing the strength of its balance sheet.
The company’s operating performance is considered adequate and in line with its position as a recently formed company. AVLA Re’s premium growth has been prudent, with controlled increments in businesses from subsidiaries in the group. Claims experience has been in line with organization’s expectations and AVLA Re was able to post positive bottom-line results in its second year of operations. AM Best will continue to monitor the underwriting quality and operating metrics of this building block.
AVLA Re’s ERM assessment is considered appropriate for its risk appetite and strongly supported by ABHC’s back office. AVLA Re benefits from capital support from ABHC, as well as synergies and brand recognition from the group, with which AVLA Re shares an experienced management.
The stable outlooks reflect AM Best's expectations that AVLA Re will meet its business objectives in terms of operating metrics and capitalization.
Negative rating actions could occur if AVLA Re’s capital base eroded due to significant capital base deterioration or sustained unfavorable operating results. Negative rating actions could also occur should AVLA Re’s importance to the group's strategy lessens in AM Best's opinion.
Positive rating actions are not likely to occur in the short to medium term, but in the long term could be driven by a steady, upward trend in operating results, which in turn, strengthen its capital base.
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