Best’s News & Research Service - August 08, 2018 12:13 PM (EDT)
A.M. Best Upgrades Issuer Credit Rating of Worldwide Medical Assurance, Ltd. Corp.
- August 08, 2018 12:13 PM (EDT)
Mexico City //BestWire// - A.M. Best has upgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “bbb+” from “bbb” and affirmed the Financial Strength Rating (FSR) of B++ (Good) of Worldwide Medical Assurance, Ltd. Corp. (WWMA) (Panama City, Panama). The outlook of the Long-Term ICR has been revised to stable from positive, while the outlook for the FSR remains stable.
The Credit Ratings (ratings) reflect WWMA’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The upgrade of the Long-Term ICR reflects WWMA’s sustained strong operating performance supported by sound underwriting practices and a conservative investment strategy, as well as balance sheet strength underpinned by risk-adjusted capitalization maintained at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The ratings also recognize WWMA’s successful gradual expansion into other Latin American markets. These strengths are offset by the company’s dependence on its reinsurance counterparties to implement its growth targets and the highly competitive landscape in Latin America’s health and life insurance segments.
The company began operations in 1999 and has since grown successfully in its niche market, providing insurance for clients traveling overseas to receive medical attention. This is done through a mix of brokers, bancassurance and direct distribution channels. WWMA benefits from its partial ownership by KfW DEG, the German development bank, through its holding company, Worldwide Group, Inc. WWMA’s model of optimizing the selection of medical care providers with support of highly rated reinsurance counterparties also have provided benefits. In recent years, WWMA has expanded operations into other Latin American markets such as Guatemala, Bolivia and Paraguay.
Historically, WWMA has maintained positive capital-creation capacity, which along with a conservative strategy of reinvesting profits, has contributed to its sound risk-adjusted capitalization. Capital management is strengthened further by the use and development of WWMA’s economic capital model, ERM practices and improved diversification among highly rated reinsurers in 2018.
WWMA’s strong underwriting, risk retention and stringent expense practices translate into strong premium sufficiency metrics. Moreover, WWMA’s synergies with its sister company in the Dominican Republic have optimized the company´s underwriting. These measures, combined with stable financial products, have resulted in improved profitability indicators, such as return on equity and return on assets, which were 21.9% and 8.4%, respectively, at year-end 2017. A.M. Best expects this trend to continue in the near to medium term.
Factors that could lead to positive rating actions include sustained stable operating performance, successful consolidation of company operations in targeted locations and maintaining diversification among highly rated reinsurers. Negative rating actions are not expected in the short term, unless significant changes in the company’s strategy damage its income-generating profile or if there is material deterioration of current capital adequacy.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Key insurance criteria reports utilized:
- Available Capital & Holding Company Analysis (Version Oct. 13, 2017)
- Evaluating Country Risk (Version Oct. 13, 2017)
- Understanding Universal BCAR (Version May 14, 2018)
View a general description of the policies and procedures used to determine credit ratings. For information on the meaning of ratings, structure, voting and the committee process for determining the ratings and monitoring activities, please refer to Understanding Best’s Credit Ratings.
- Previous Rating Date: Aug. 10, 2017
- Date of Financial Data Used: June 30, 2018
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