AM Best rates credit insurer targeting LatAm
AM Best has assigned a financial strength rating of A- (Excellent) to Solunion Seguros de Crédito, Compañía Internacional de Seguros y Reaseguros, a credit insurer formed to write business in Spain and Latin America (excluding Brazil).
The company is a joint venture between Mapfre Global Risks, Compania Internacional de Seguros y Reaseguros and Euler Hermes.
The outlook assigned to both ratings is stable. AM Best said the rating reflects Solunion’s strategic importance to its joint shareholders as their exclusive writer of trade credit insurance business in Spain and Latin America (excluding Brazil).
Solunion also benefits from substantial parental support in the form of a combined 90 percent quota share arrangement and excess-of-loss protection, along with its shareholders’ commitment to sustain its strong capital position.
The ratings also reflect Solunion’s excellent consolidated risk-adjusted capitalisation, the expectation of profitable, if volatile, operating earnings that are highly correlated to the macroeconomic environment, and its solid competitive profile, AM Best said.
The rating agency did note that the group’s operating performance has been unpredictable. It reported a loss in its first year of operation, compared with a pre-tax profit of €7.7 million in 2014. For the first half of 2015, Solunion has reported positive results, strengthened by lower claims activity and positive reserve development.
AM Best expects profitability to be supported by better economic conditions in Spain (approximately 75 percent of gross premium income in 2014), improved quality of the underwriting portfolio and the implementation of Euler Hermes’ robust risk underwriting framework.
