AM Best Assigns Credit Ratings to AVLA Perú Compañía de Seguros S.A.

Wednesday, December 5, 2018

Press release by AM Best

MEXICO CITY, December 5, 2018-AM Best has assigned a Financial Strength Rating of B++ (Good) and a Long-Term Issuer Credit Rating of "bbb" to AVLA Perú Compañía de Seguros S.A. (AVLAP) (Lima, Peru). The outlook assigned to these Credit Ratings (ratings) is stable.

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

AVLAP is a Peruvian property/casualty insurer constituted in 2015, specialized in surety, with complimentary lines of credit insurance and engineering, ranking eighth among the non-life insurance segment in Peru and third among the surety market.

AM Best considers AVLAP's business profile as neutral to the rating. Since its creation in 2015, AVLAP has been able to successfully exploit a guarantee market with limited capacity in Peru, becoming one of the main participants for credit insurance and surety.

The company's recent creation and current development of its niche market still leaves room for implementation risk, which in AM Best's view, is mitigated partially by the thus far successful implementation of its business plan. Additionally, AM Best's assessment of the company's business profile is limited by the small size of the operation within a small segment in a Best's Country Risk Tier 3 country.

AM Best considers the company's operating performance to be adequate despite its recent creation.

AVLAP has been able to promote its products in a profitable manner and maintain adequate underwriting metrics; however, the operation remains small and needs to converge to an adequate and less volatile cost structure. Operating performance and balance sheet strength are strongly supported by a reinsurer panel with excellent security.

AVLAP's balance sheet assessment is strong given its solid capital base for the risks it undertakes, as reflected in its strong risk-adjusted capitalization. The strong assessment also recognizes the willingness and proven history of capital contributions made by its shareholders to support AVLAP's growth.

The stable rating outlooks reflect the company's growth prospects, supported by the willingness of its shareholders to continue to support the company's commercial and financial development with capital contributions.

Positive rating actions could take place if the company continues to develop its business in a profitable and planned fashion, while further strengthening its capital base and maintaining adequate underwriting. Negative rating actions could take place if the company fails to profitably achieve its growth objectives while at the same time affecting its risk adjusted capitalization. Additionally, if there are important capital outflows to its holding company that weaken AVLAP's risk-adjusted capitalization, the ratings could be downgraded.

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of AM Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating

Methodology can be found at