Best’s News & Research Service - November 11, 2022 12:24 PM (EST)
AM Best Affirms Credit Ratings of Junto Resseguros S.A. and Junto Seguros S.A.
- November 11, 2022 12:24 PM (EST)
Oldwick //BestWire// - AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a-” (Excellent) of Junto Resseguros S.A. (Junto Re) and Junto Seguros S.A. (Junto Seg) (collectively referred to as Junto). The outlook of these Credit Ratings (ratings) is stable. Both companies are domiciled in Brazil.
The ratings reflect Junto’s balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
Junto Re is classified as a local reinsurer in Brazil and mainly operates as a captive reinsurer for Junto Seg, an organization that has been writing surety directly for more than two decades. Junto Seg is the market-facing company of the group and one of the leading surety writers in Brazil. The companies benefit operationally from its minority shareholder, Travelers Brazil Acquisition LLC (with a 49.5% ownership), which is ultimately owned by The Travelers Companies, Inc. These benefits include collaboration on ERM, employee development, retrocession placement, claims handling, business development and other operational functions. After a large return of excess capital payment made to the parent companies, Junto continues to maintain modest underwriting leverage and strong liquidity metrics, with a comprehensive retrocession program that provides additional capacity and reduces the company’s overall exposure. Junto is well-positioned to benefit from growth opportunities in the segment, such as performance bonds.
Partially offsetting these positive rating factors is Junto’s concentration risk as a monoline surety underwriter with business concentration in a single country. As a result, albeit not likely, restrictive regulatory changes could impair Junto’s ability to execute its strategy. Junto’s plans to mitigate this risk include expansion into related lines of business. Additionally, Junto’s exposure per principal increased significantly, enlarging reinsurance dependency and potentially limiting the company’s ability to continue to increase gross premium growth rates in the future.
Brazil’s surety (re)insurance market continues to be highly competitive, with homegrown and global (re)insurers vying for market share. With Brazil’s persistent economic volatility, and with meaningful future growth still uncertain, companies continue to seek international expansion while keeping an eye on opportunities in the (re)insurance market. Surety has been one of the fastest-growing segments in the (re)insurance industry in Brazil.
AM Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.
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.