Nueva York.- Moody’s Investors Service ratificó la calificación Baa3 de solidez financiera de seguros (IFS) global en moneda local de Seguros Sura S.A. (Uruguay). La perspectiva cambió de negativa a estable.
La afirmación de la calificación de Sura Uruguay refleja su importante presencia de mercado en la industria de seguros de propiedad y accidentes (P&C) de Uruguay, su buena calidad de activos -compuestos principalmente por títulos de grado de inversión-, una buena diversificación de productos y su historial relativamente bueno de suscribir ganancias a pesar de la caída en 2018.
La adecuación de capital de Sura Uruguay ha caído por debajo de sus pares debido a los elevados pagos de dividendos en los últimos años. Sin embargo, sigue siendo adecuado y respalda su perfil crediticio general. A diciembre de 2020, el apalancamiento de suscripción bruto ajustado de Moody’s se situó en 4.4x, desde 4.2x en 2019 y 5.0x en 2018.
Moody’s affirms Seguros Sura (Uruguay) Baa3 rating; outlook changed to stable
New York , April 23, 2021.- Moody’s Investors Service («Moody’s») has affirmed the Baa3 global local-currency insurance financial strength (IFS) rating of Seguros Sura S.A. (URUGUAY) (Sura Uruguay). The outlook was changed to stable from negative.
RATINGS RATIONALE
The affirmation of Sura Uruguay’s rating reflects its important market presence in Uruguay’s Property and Casualty (P&C) insurance industry, its good asset quality -mostly composed of investment grade securities- a good product diversification, and its relatively good track record of underwriting profits despite the drop in 2018. Sura Uruguay’s capital adequacy has fallen below peers due to steep dividend payouts in the last few years. However, it is still adequate and supports its overall credit profile. As of December 2020, the company’s Moody’s adjusted Gross Underwriting Leverage stood at 4.4x, from 4.2x in 2019 and 5.0x in 2018.
Furthermore, the change in the company’s rating outlook to stable from negative reflects the recovery in its underwriting results in the last two years from the losses reported in 2018. Also, this change considers Moody’s expectations that Sura Uruguay will be able to keep a stable credit profile consistent with its Baa3 rating over the coming 12 to 18 months.
Competitive pressures in the Uruguayan automobile insurance industry -Sura Uruguay’s main line of business- continue to be significant. However, we expect that the measures taken by the company to recover its profitability will likely lead to more stable underwriting results. Furthermore, the company will likely benefit as well from strong earnings from other lines of business, which would in turn support its capital adequacy.
Sura Uruguay, similarly to many peers in the Uruguayan insurance industry, had suffered in 2018 steep losses in its automobile portfolio. This was mainly caused by price competition and increased claim frequency and severity, which led to net losses and a reduction in its capital adequacy. Since then, the company has adjusted premium rates and its underwriting standards, which have all led to a gradual recovery of its profitability metrics. Despite the fact that the company’s underwriting losses are still high in the automobile segment, it’s overall profitability metrics have benefited from solid underwriting performance in its other lines of business. As of December 2020 the company’s Return on Capital (ROC) increased to 21.2% form 15.6% in 2019 and a negative 20.9% (-20.9%) in 2018, the latter being adjusted for inflation.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
Sura Uruguay’s ratings could be upgraded if: 1) combined ratios improve, with metrics persistently below 100% for its main business lines, 2) a recovery on its capital metrics, with gross underwriting leverage consistently below 3.5x, or 3) an upgrade of Uruguay’s sovereign rating.
Sura Uruguay’s ratings could be downgraded if: 1) profitability declines, with combined ratios consistently above 100%, 2) its capital adequacy weakens, with gross underwriting leverage consistently above 5.0x, or 3) a downgrade of Uruguay’s sovereign rating or a deterioration of the country’s operating environment.
Headquartered in Montevideo, Uruguay, Sura Uruguay reported net profit of UYU 238 million and gross premiums written of UYU 3.7 billion for the fiscal year ended 31 December 2020. As of that date, the company reported total assets of UYU 4.4 billion and shareholders’ equity of UYU 1,085 million.
The principal methodology used in this rating was Property and Casualty Insurers Methodology published in November 2019 and available at www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1187352″>https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1187352 . Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.