Tag: Credit Ratings

Categories
Business

AM Best Affirms credit ratings of First American Title Insurance Group members and First American Financial Corporation

OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) of “a” of First American Title Insurance Company (Omaha, NE) and its title subsidiaries, which are referred to as First American Title Insurance Group (FATIG). In addition, AM Best has affirmed the Long-Term ICR of “bbb” of the parent holding company, First American Financial Corporation (FAF) (Delaware) [NYSE: FAF]. The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed listing of the companies and ratings.)

The ratings reflect FATIG’s balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

FATIG maintains a solid market position within the U.S. title insurance industry as its second-largest underwriter, based on 2019 direct premiums written. Policies are distributed on a direct basis and through a network of independent agents. The group invests heavily in its title plant, which is one of the most comprehensive in the industry. The group’s operating results have generally been in line with the title industry composite averages and supportive of surplus growth. FATIG benefits from a strong franchise value, financial flexibility and operational support from FAF, which maintains relatively modest financial leverage and solid interest coverage.

The FSR of A (Excellent) and the Long-Term ICRs of “a” have been affirmed with stable outlooks for the subsidiaries of First American Financial Corporation:

  • First American Title Insurance Company
  • First American Title Insurance Company of Australia Pty Limited
  • First American Title Insurance Company of Louisiana
  • First European Title Insurance Company Limited
  • First Title Insurance plc
  • Ohio Bar Title Insurance Company

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media – Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2020 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Contacts

Kourtnie Beckwith

Financial Analyst

+1 908 439 2200, ext. 5124

kourtnie.beckwith@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Fred Eslami
Associate Director
+1 908 439 2200, ext. 5406

fred.eslami@ambest.com

Jim Peavy
Director, Communications
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

Categories
International & World

AM Best affirms credit ratings of Trinidad & Tobago Insurance Limited

OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Trinidad & Tobago Insurance Limited (TATIL) (Trinidad and Tobago). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect TATIL’s balance sheet strength, which AM Best categorizes as strongest, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.

TATIL’s balance sheet strength is supported by its risk-adjusted capitalization being at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). A profitable overall earnings trend as well as an effective reinsurance program that mitigates catastrophic loss, have enhanced TATIL’s surplus growth and level of risk-adjusted capitalization.

TATIL has produced favorable underwriting results consistently and this has been augmented by a stable level of investment and rental income resulting in historically profitable overall operating performance. These factors are somewhat offset by the geographic concentration of TATIL’s operations, the continuing challenge to maintain earnings and market share in extremely competitive markets, as well as the inherent exposure to the potential impact from catastrophe events.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media – Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2020 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Contacts

Ricardo Longchallon

Senior Financial Analyst
+1 908 439 2200, ext. 5676
ricardo.longchallon@ambest.com

Sharon Marks
Associate Director
+1 908 439 2200, ext. 5477
sharon.marks@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

Categories
Business

AM Best affirms credit ratings of Highmark Inc. and most subsidiaries; upgrades credit ratings of Highmark Casualty Insurance Company

OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a” of Highmark Inc. (Highmark) (Camp Hill, PA) and its life/health (L/H) subsidiaries, collectively known as Highmark Inc. Group. Concurrently, AM Best has affirmed the FSRs of A (Excellent) and the Long-Term ICRs of “a” of Highmark’s dental subsidiaries, which operate under the United Concordia brand name. Additionally, AM Best has upgraded the FSR to A (Excellent) from A- (Excellent) and the Long-Term ICR to “a” from “a-” of Highmark Casualty Insurance Company (Highmark Casualty) (Pittsburgh, PA). Lastly, AM Best has affirmed the Long-Term Issue Credit Ratings (Long-Term IR) of “a-” on Highmark’s existing senior unsecured notes. The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed listing of the companies and the Long-Term IRs).

The ratings of Highmark Inc. Group reflect its balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

Highmark continues to maintain the strongest level of risk-adjusted capital based on contributions from its favorable operating results over the past three years. Highmark’s operating results are driven by good underwriting results in its commercial and Medicare Advantage business segments, as well as stable earnings from its medical stop loss business written mainly by HM Life Insurance Company and favorable investment income. Overall operating results over the past several years were enhanced by the proceeds from the sale of its subsidiaries, Davis Vision in 2017 and Visionworks in 2019. Premium development has been challenging for the group due to competitive and economic pressure in its primary markets. Highmark is one of the largest Blue Cross Blue Shield plans in the nation, offering health products and services in service areas across three states. Highmark has good business diversification through its medical stop loss business, national dental operations and technology platform services. Highmark also is part of an integrated delivery system with its affiliate, Allegheny Health Network, in its Pennsylvania service area, offering coordinated and high-quality cost-effective care and health insurance products. Highmark also has a well-developed and comprehensive ERM program, which is incorporated into business operations and strategic planning.

The ratings of United Concordia reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate ERM.

United Concordia’s risk-adjusted capitalization has declined modestly over the past two years, as the dividends to its parent have exceeded net earnings due to the planned return of certain excess capital to its parent. Nevertheless, risk-adjusted capital presently remains at the very strong level. AM Best will continue to monitor the capitalization of the dental entities, with the expectation that they will be supported by the parent organization as needed. Finally, premium growth and operating earnings have been especially strong, driven in part by the company’s government contracts including the Federal Employees Dental and Visions Insurance Program and TRICARE Dental Plan. United Concordia has a large membership base, with almost 9 million individuals and a large national dental network with over 127,000 dentists.

The ratings of Highmark Casualty reflect its balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, limited business profile and appropriate ERM.

The rating upgrades of Highmark Casualty reflect rating enhancement received based on its strategic

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importance and dependence on its affiliate, HM Life Insurance Company, from which it derives the majority of its premiums through a quota share arrangement for medical stop loss business.

The FSR of A (Excellent) and the Long-Term ICRs of “a” have been affirmed, with stable outlooks for Highmark Inc. and its following L/H subsidiaries:

  • HM Health Insurance Company
  • HM Life Insurance Company
  • HM Life Insurance Company of New York
  • Highmark Choice Company
  • Highmark West Virginia Inc.

The FSR of A (Excellent) and the Long-Term ICRs of “a” have been affirmed, with stable outlooks for the following dental subsidiaries of Highmark Inc.:

  • United Concordia Companies, Inc.
  • United Concordia Insurance Company
  • United Concordia Insurance Company of New York
  • United Concordia Dental Plans of California, Inc.
  • United Concordia Dental Plans of Pennsylvania, Inc.
  • United Concordia Dental Plans, Inc.

The FSR has been upgraded to A (Excellent) from A- (Excellent) and the Long-Term ICR to “a” from “a-”, with a stable outlook for Highmark Casualty Insurance Company, an insurance subsidiary of Highmark Inc.:

The following Long-Term IRs have been affirmed, with stable outlooks:

Highmark Inc.—

–“a-” on $350 million 4.75% senior unsecured notes, due 2021

–“a-” on $250 million 6.125% senior unsecured notes, due 2041

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media – Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2020 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Contacts

Bridget Maehr

Associate Director

+1 908 439 2200, ext. 5321

bridget.maehr@ambest.com

Christopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.com

Joseph Zazzera, MBA

Director

+1 908 439 2200, ext. 5797

joseph.zazzera@ambest.com

Jim Peavy

Director, Public Relations

+1 908 439 2200, ext. 5644

james.peavy@ambest.com

Categories
Business

AM Best removes from under review with positive implications and upgrades credit ratings of Moda Health Plan, Inc. and Oregon Dental Service

OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has removed from under review with positive implications and upgraded the Financial Strength Rating (FSR) to B++ (Good) from B (Fair) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “bbb” from “bb” of Moda Health Plan, Inc. (Moda Health). Concurrently, AM Best has removed from under review with positive implications and upgraded the FSR to B++ (Good) from B (Fair) and the Long-Term ICR to “bbb+” from “bb” of Oregon Dental Service (ODS). Both companies are domiciled in Portland, OR. The outlook assigned to these Credit Ratings (ratings) is stable.

The ratings of Moda Health reflect its balance sheet strength, which AM Best categorizes as adequate, as well as its marginal operating performance, limited business profile, appropriate ERM and support of its owners.

The rating upgrades for Moda Health reflects the improvement in absolute capital during the third quarter of 2020 and in its estimated Best’s Capital Adequacy Ratio (BCAR). In April 2020, the U.S. Supreme Court ruled that the federal government is required to pay health insurers for the amounts owed under the Patient Protection and Affordable Care Act’s Risk Corridors program. Moda Health had been party to a lawsuit suing the federal government and recently recovered payment of $248.9 million for damages incurred during 2014-2016. Furthermore, with the increased level of capital, AM Best expects Moda’s debt leverage and financial flexibility to substantially improve. Moda Health had issued external surplus notes, which previously comprised a sizable portion of the company’s capital and surplus.

The ratings of ODS reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

The rating upgrades for ODS reflect the improvement in its estimated Best’s Capital Adequacy Ratio (BCAR) as well as the improvement in the financial flexibility and fungibility of capital within the ODS organization, driven by the sizeable payment from the federal government to Moda Health. ODS maintains a 50.5% ownership in its subsidiary, Moda Health, following its sale of its remaining shares of common stock to Delta Dental of California (DDC) and formation of its strategic partnership that closed in 2019.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media – Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2020 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Contacts

Jeffrey Lane
Senior Financial Analyst
+1 908 439 2200, ext. 5567
jeffrey.lane@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Wayne Kaminski
Senior Financial Analyst
+1 908 439 2200, ext. 5061
wayne.kaminski@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

Categories
Business

AM Best affirms credit ratings of American Federated Insurance Company and American Federated Life Insurance Company

OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of B (Fair) and the Long-Term Issuer Credit Ratings of “bb” of American Federated Insurance Company (AFIC) and American Federated Life Insurance Company (AFLIC). The outlook of these Credit Ratings (ratings) is stable. Both companies are known collectively as American Federated Insurance Companies and are domiciled in Flowood, MS.

The ratings of AFIC reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, limited business profile and marginal enterprise risk management (ERM). The ratings also reflect drag from the parent holding company, First Tower Finance Company LLC (First Tower Finance).

The ratings of AFLIC reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, limited business profile and marginal ERM. The ratings also reflect drag from the parent holding company, First Tower Finance.

The American Federated Insurance Companies are indirect, wholly owned subsidiaries of First Tower Finance, a multiline specialty finance company. Prospect Capital Corporation [NASDAQ: PSEC], a publicly traded closed-end investment company, indirectly owns an 80.1% majority interest in First Tower Finance and its subsidiaries.

AFIC provides credit insurance coverage on collateralized personal loans originated by the consumer finance subsidiaries of First Tower Finance, and involuntary unemployment insurance.

AFLIC provides credit life and credit accident and health insurance coverages for individuals that have personal loans originated by the consumer finance subsidiaries of First Tower Finance. Given the products offered by the two companies, AM Best will continue to monitor the potential effects of COVID-19 and the macroeconomic environment on the business profiles and operations of AFIC and AFLIC.

The drag to the ratings of AFIC and AFLIC reflects the considerable financial leverage with a deficit in members’ equity at First Tower Finance, stemming from a 2014 transaction involving the return of First Tower Finance’s capital to its members.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media – Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2020 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Contacts

Jeffrey Stary

Financial Analyst
+1 908 439 2200, ext. 5689
jeffrey.stary@ambest.com

Raymond Thompson, CPCU, ARe, ARM
Director
+1 908 439 2200, ext. 5621
raymond.thompson@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

Categories
Business

AM Best downgrades credit ratings of Armed Forces Insurance Exchange

OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has downgraded the Financial Strength Rating to B+ (Good) from B++ (Good) and the Long-Term Issuer Credit Rating to “bbb-” from “bbb” of Armed Forces Insurance Exchange (AFIE) (Leavenworth, KS). The outlooks of these Credit Ratings (ratings) has been revised to stable from negative.

The ratings reflect AFIE’s balance sheet strength, which AM Best categorizes as strong, as well as its marginal operating performance, limited business profile and marginal enterprise risk management (ERM).

AFIE historically had an appropriate ERM program, but AM Best has called the effectiveness of this program into question due to significant volatility in operating results and declining surplus. The further surplus deterioration into 2019 and 2020 as a result of negative operating results supports AM Best’s assessment of AFIE’s ERM as marginal.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media – Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2020 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Contacts

David Braisted
Financial Analyst
+1 908 439 2200, ext. 5120
david.braisted@ambest.com

Christopher Sharkey

Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Joseph Burtone
Director
+1 908 439 2200, ext. 5125
joseph.burtone@ambest.com

Jim Peavy

Director, Public Relations

+1 908 439 2200, ext. 5644

james.peavy@ambest.com

Categories
Business

AM Best affirms credit ratings of Fidelity Life Association, A Legal Reserve Life Insurance Company

OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Fidelity Life Association, A Legal Reserve Life Insurance Company (FLA) (Chicago, IL). The outlook of these Credit Ratings (ratings) is stable. FLA is a wholly owned subsidiary of Vericity, Inc. (Vericity or the Company).

The ratings reflect FLA’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

FLA has maintained the strongest level of risk-adjusted capitalization, even though total capital and surplus has been declining for the past couple of years. Reinsurance leverage remains high against industry trends, as the company continues to utilize reserve financing as part of its capital structure. While AM Best considers the operating performance results to be adequate, operating performance in 2019 was impacted by a portion of non-recurring costs associated with the initial public offering. Direct premiums written remained strong and have been increasing steadily, with somewhat improved return on equity from prior years, but still lags behind the industry average.

On Aug. 7, 2019, Vericity completed the initial public offering of its common stock, and as a result of the conversion, it became the holding company for converted Members Mutual Holding Company and its indirect subsidiaries, including Fidelity Life Association and eFinancial, LLC, and began trading on the Nasdaq Capital Market under the symbol VERY. The completed Subscription Rights Conversion raised $148.8 million. A majority of the net premiums written are associated with ordinary life products and tend to have higher lapses than the industry average. The Company’s strategic alliance with affinity partners has added client growth, creating an opportunity for value-added capital deployment.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media – Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2020 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Contacts

Igor Bass

Financial Analyst

+1 908 439 2200, ext. 5109

igor.bass@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Anthony McSwieney
Senior Financial Analyst
+1 908 439 2200, ext. 5715
anthony.mcswieney@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

Categories
Business

AM Best affirms credit ratings of Junto Resseguros S.A. and Junto Seguros S.A.

OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Ratings of “a-” of Junto Resseguros S.A. (Junto Re) and Junto Seguros S.A. (Junto Seg) (collectively referred to as Junto). The outlook of these Credit Ratings (ratings) is stable. Both companies are domiciled in Brazil.

The ratings reflect Junto’s balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

Junto Re is classified as a local reinsurer in Brazil and mainly operates as a captive reinsurer for Junto Seg, an organization that has been writing surety directly for more than two decades. Junto Seg is the market-facing company of the group and one of the leading surety writers in Brazil. Junto benefits operationally from its minority shareholder, Travelers Brazil Acquisition LLC (with a 49.5% ownership), which is ultimately owned by The Travelers Companies, Inc. These benefits include collaboration on ERM, employee development, retrocession placement, claims handling, business development and other operational functions. Junto maintains low underwriting leverage and strong liquidity metrics, with a comprehensive retrocession program that provides additional capacity and reduces the company’s overall exposure.

Partially offsetting these positive rating factors is Junto’s concentration risk as essentially a monoline surety writer with business concentration in a single country. Junto’s future plans to mitigate this risk include expansion into related lines of business. Junto also executed a capital reduction and increased dividend payments to reduce the level of its surplus and optimize its capital structure. This did not result in a significant decrease in risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), as the company’s net premiums written were significantly lower in 2019. Going forward, if net premiums resume growth, the risk-adjusted capitalization could be affected negatively if there is not a corresponding increase in capital.

Additionally, Brazil’s (re)insurance market continues to be highly competitive, with homegrown and global (re)insurers vying for market share. With Brazil’s economy showing a meaningful downturn caused by the COVID-19 pandemic, companies continue to seek international expansion while keeping an eye on opportunities in the (re)insurance market. Surety has been one of the fastest-growing segments in the (re)insurance industry in Brazil.

Positive rating triggers include a successful long-term execution of the group’s growth and diversification strategy and consistent operating performance, along with sustained and robust risk-adjusted capitalization. Negative rating triggers include a deterioration in either operating results or risk-adjusted capitalization, the inability to execute its growth and diversification strategy, a continued weakness in Brazil’s economy or a downgrade in Brazil’s country risk tier.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media – Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2020 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Contacts

Guilherme Monteiro Simoes
Senior Financial Analyst
+1 908 439 2200, ext. 5301
guy.simoes@ambest.com

Scott Mangan
Associate Director
+1 908 439 2200, ext. 5593
scott.mangan@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com