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FOR IMMEDIATE RELEASE
LONDON - DECEMBER 08, 2017 10:18 AM (EST)
A.M. Best has removed from under review with developing implications and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Santa Lucía S.A. Compañía de Seguros y Reaseguros (Santa Lucía) (Spain). The outlook assigned to these Credit Ratings (ratings) is positive.
The ratings reflect Santa Lucía’s balance sheet strength, which A.M. Best categorises as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
The positive outlooks reflect the expectation that Santa Lucía’s enhanced business profile, following its acquisition of Aviva Vida y Pensiones, S.A. de Seguros y Reaseguros (Aviva), Aviva Gestión SGCIIC (Aviva Gestión) and its 50% stake in the life insurance joint ventures, Unicorp Vida, Compañía de Seguros y Reaseguros, S.A. (Unicorp) and Caja España Vida, Compañía de Seguros y Reaseguros SA (Caja España), may lead to improved and stable operating performance. A.M. Best will continue to assess the impact of the transaction on Santa Lucía’s operating performance, given that it remains subject to the execution risk associated with the integration of the operations acquired.
Although the acquisition has increased Santa Lucía’s capital requirements, chiefly as a result of higher underwriting and asset risks, and reduced available capital following the recognition of goodwill, risk-adjusted capitalisation is expected to remain at the strongest level. Santa Lucía’s prospective capital position is expected to benefit from the additional revenue source which drives solid internal capital generation. Furthermore, the group’s balance sheet strength continues to be protected against the occurrence of most catastrophic perils, which are covered by the Spanish government’s national scheme (Consorcio de Compensación de Seguros).
Santa Lucía has a track record of adequate operating performance, negatively impacted by reserve strengthening in its life and funeral expenses (“decesos”) lines of business in recent years. The company reported an improved net result of EUR 113.4 million in 2016, driven primarily by better claims experience on the home insurance book. The newly acquired Aviva, Unicorp and Caja España life business historically has been profitable, and is weighted towards life risk as well as unit-linked and short-term saving products. This provides Santa Lucía with a more balanced product offering in the domestic market, with enhanced distribution capabilities through the bancassurance and broker channels, which in turn is expected to benefit the group’s overall profitability.
This press release relates to Credit Ratings that have been published on A.M. 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 A.M. 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 A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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