AM Best Revises Outlooks to Positive and Affirms Credit Ratings of Seguros e Inversiones, S.A.

AM Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” (Good) of Seguros e Inversiones, S.A. (SISA) (El Salvador).

The Credit Ratings (ratings) reflect SISA’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

The positive outlooks reflect SISA’s balance sheet strength underpinned by reinforced risk-adjusted capitalization in conjunction with consistent improvements in El Salvador’s macroeconomic environment, which enhances AM Best’s view on SISA’s asset allocation strategy within non-investment grade fixed income.

The ratings also reflect SISA’s strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), supported by consistent profitability, a diversified business profile and its market-leading position, as well as its appropriate reinsurance program. The company’s affiliation with Inversiones Financieras Grupo Imperia Cuscatlíán S.A. (IFGIC) provides synergy and operating efficiencies.

SISA initiated operations in 1962. At year-end 2023, the company was El Salvador’s market leader with 23% of gross premium written covering domestic exposures. Life insurance products comprise 42% of SISA’s business portfolio, with the balance being property/casualty products (45%) and health (13%). Historically, SISA’s distribution channels have been positioned mainly with brokers, pension funds, bancassurance and the government. In 2020-21, IFGIC led the acquisition of Seguros SISA SV, S.A. (Seguros SISA SV) in order to support SISA’s growing domestic and regional expansion.

SISA’s risk-adjusted capitalization is supportive of its ratings, and its capital base was strengthened further by the Seguros SISA SV acquisition. Additionally, SISA’s balance sheet strength assessment is supported by a comprehensive reinsurance program placed with reinsurers that have excellent security. AM Best’s opinion on the company’s very strong balance sheet strength assessment is pressured by the country’s macro fundamentals, given the company’s exposure to non-investment grade securities, which has eased as El Salvador has reflected signs of improvements within the short term.

SISA historically has shown disciplined underwriting, consistently reporting overall premium sufficiency levels that compare positively with its competitors, as reflected by a combined ratio of 96.4%, as of year-end 2022. However, the company reported a deteriorated combined ratio above 100% in 2023 mainly pressured by the impacts of the pension funds business (non-recurrent event) and fireman tax.

Key factors that could lead to positive rating actions for SISA include enhancements to the company’s very strong balance sheet strength assessment resulting from sustained improvements in El Salvador’s macroeconomic conditions while maintaining its strongest risk-adjusted capitalization. Conversely, a sharp deterioration in operating performance and further pressure on the company’s balance sheet strength driven by El Salvador´s macroeconomic conditions could lead to negative rating actions.

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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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 London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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