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FOR IMMEDIATE RELEASE
OLDWICK - OCTOBER 14, 2014 10:15 AM (EDT)
A.M. Best has assigned a financial strength rating of A- (Excellent) and an issuer credit rating of "a-" to J. Malucelli Seguradora S.A. (JM Seguradora) (Brazil). The outlook assigned to both ratings is stable.
The ratings of JM Seguradora reflect its strong risk-adjusted capitalization, consistently profitable results and solid business profile as a leading surety writer in Brazil. JM Seguradora's emphasis has been on a broad range of surety clients with underwriting and investment income contributing to overall earnings. JM Seguradora also derives operational benefits from its 49.5% minority shareholder, The Travelers' Companies, Inc. These benefits include collaboration on enterprise risk management, employee development, reinsurance placement, claims handling and other operational functions. Additionally, JM Seguradora maintains comfortable leverage and liquidity metrics and a comprehensive reinsurance program with its sister company, J.Malucelli Resseguradora S.A., which provides additional capacity and reduces the company's overall exposures.
Partially offsetting these positive factors is JM Seguradora's concentration risk as essentially a monoline surety writer in a single country. This concentration is magnified by surety business being closely linked to the overall health of the economy, making the surety market conditions particularly sensitive to economic growth and stability. Additionally, as insurance penetration continues to increase in Brazil, insurance markets are becoming increasingly competitive with indigenous and global insurers vying for market share.
A.M. Best believes that JM Seguradora is adequately positioned at its current rating level. However, rating factors that could lead to positive rating movement include sustained robust operating performance while maintaining strong risk-adjusted capitalization. Negative rating triggers include deterioration in either operating results or risk-adjusted capitalization, or a downgrade in Brazil's country risk tier.
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:
A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.