AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of 'bbb' of AXA Corporate Solutions Brasil e America Latina Resseguros S.A. (AXA CS Latam) (Brazil).
The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect AXA CS Latam's balance sheet strength, which AM Best categorizes as strong, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management.
The ratings reflect AXA CS Latam's business plan and benefits derived from being integrated into AXA S.A.'s (AXA) corporate solutions segment, led by AXA CS Assurance S.A. AXA is a strong global organization with strong brand recognition, broad product offering, global systems and solid risk management infrastructure. The ratings also contemplate AXA CS Latam's strategic importance to AXA through access to Latin America's largest economy.
The ratings also reflect the capital support via capital increases and the intergroup reinsurance support provided to AXA CS Latam, which protects its balance sheet and risk-adjusted capitalization. Despite the group's significant resources and business plan, AXA CS Latam will be challenged to profitably build out its operations in Brazil's highly competitive (re)insurance market.
AXA CS Latam's performance has been negative since its first full year of operations four years ago, with volatile results and claim development. However, in the current year, the company has thus far produced an underwriting profit and appears to show signs of stability in its operations. AM Best will continue to closely monitor AXA CS Latam's operating performance.
Additionally, Brazil is still faces challenges to resuming growth, despite more stable economic and political conditions, which could increase operational and execution risk if the much-needed reforms do not get implemented in a reasonable period of time.
Factors that could have a positive impact on AXA CS Latam's ratings are sustained and stable profitability, improved risk-adjusted capitalization or an additional enhancement from the company's ultimate parent.
Factors that could have a negative impact on AXA CS Latam's ratings include the lack of support from the parent organization, sustained material volatility in operating performance or deterioration in risk-adjusted capitalization. Other factors that potentially could have a negative impact on the ratings are the company's inability to meet its profitability targets or a downgrade of 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 Understanding 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 provider specializing in the insurance industry. The company does business in more than 100 countries. Headquartered in Oldwick, NJ, AM Best has offices in cities around the world, including London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.
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