A.M. Best Company

09/01/2021 | Press release | Distributed by Public on 09/01/2021 09:05

AM Best Affirms Credit Ratings of Maxseguros EPM Ltd.

SEPTEMBER 01, 2021 11:03 AM (EDT)

AM Best Affirms Credit Ratings of Maxseguros EPM Ltd.


Elí Sánchez
Associate Director
+52 55 1102 2720, ext. 122
[email protected]

Alfonso Novelo
Senior Director, Analytics
+52 55 1102 2720, ext. 107
[email protected]

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
[email protected]

Jim Peavy
Director, Communications
+1 908 439 2200, ext. 5644
[email protected]


AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of 'a-' (Excellent) of Maxseguros EPM Ltd. (Maxseguros) (Bermuda). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Maxseguros' balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

The ratings also reflect Maxseguros' risk-adjusted capitalization assessed at the strongest level, as measured by Best's Capital Adequacy Ratio (BCAR), and supported by a comprehensive and adequate reinsurance program, coupled with a conservative investment policy and limited premium risk exposure. The ratings recognize the important role of the company within its corporate parent structure, Empresas Públicas de Medellin E.S.P. (EPM), which is owned by the Colombian municipality of Medellin. EPM is the largest power generation and multi-utility company in Colombia. Maxseguros is a single-parent captive insurer wholly owned by EPM and provides reinsurance to the EPM group, covering property damage and business interruption, commercial crime, cyber risk, directors and officers, errors and omissions and general liability exposures.

These positive rating factors are offset partially by EPM's substantial financial leverage and Maxseguros' limited business and market scope, which is mitigated somewhat by the company's stable results, favorable geographic spread of risk and the history of Maxseguros' growing surplus position. Additionally, while Maxseguros depends on reinsurance, EPM's senior management is involved intimately in the captive's operations.

The stable outlooks are derived from Maxseguros' role within EPM's strategy and the financial flexibility derived from its balance sheet strength. This has been proven by the company in increasing its retentions in profitable business of its operations without any adverse effect on its performance or capitalization. AM Best has a favorable view of Maxseguros' overall profile within the ultimate parent's structure; however, EPM's credit profile and financial leverage remain key factors for future reviews of Maxseguros.

AM Best does not foresee positive rating actions at this time. Negative rating actions could occur if EPM's credit profile becomes pressured or if operating performance deteriorates due to increased retentions. Additionally, negative rating actions could arise if there is a material shift in Maxseguros' risk profile or role within EPM that undermines its stability and profitability, including increased activity in cash outflows to its parent company.

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.

The methodology used in determining these ratings is Best's Credit Rating Methodology (Version Nov. 13, 2020), which provides a comprehensive explanation of AM 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:

  • Alternative Risk Transfer (ART) (Version Oct. 13, 2017)

  • Evaluating Country Risk (Version Oct. 13, 2017)

  • Understanding Global BCAR (Version July 22, 2021)

  • Catastrophe Analysis in AM Best Ratings (Version Oct. 13, 2017)

  • Available Capital & Holding Company Analysis (Version Oct. 13, 2017)

  • Scoring and Assessing Innovation (March 5, 2020)

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 Guide to Best's Credit Ratings.

  • Previous Rating Date: Aug. 26, 2020

  • Date Range of Financial Data Used: Dec. 31, 2016-June 30, 2021

This press release relates to rating(s) that have been published on AM Best's website. For additional 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.

AM Best does not validate or certify the information provided by the client in order to issue a credit rating.

While the information obtained from the material source(s) is believed to be reliable, its accuracy is not guaranteed. AM Best does not audit the company's financial records or statements, or otherwise independently verify the accuracy and reliability of the information; therefore, AM Best cannot attest as to the accuracy of the information provided.

AM Best's credit ratings are independent and objective opinions, not statements of fact. AM Best is not an Investment Advisor, does not offer investment advice of any kind, nor does the company or its Ratings Analysts offer any form of structuring or financial advice. AM Best's credit opinions are not recommendations to buy, sell or hold securities, or to make any other investment decisions. View our entire notice for complete details.

AM Best receives compensation for interactive rating services provided to organizations that it rates. AM Best may also receive compensation from rated entities for non-rating related services or products offered by AM Best. AM Best does not offer consulting or advisory services. For more information regarding AM Best's rating process, including handling of confidential (non-public) information, independence, and avoidance of conflicts of interest, please read the AM Best Code of Conduct. For information on the proper use of Best's Credit Ratings, 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.