AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a+” of Chubb Perú S.A. Compañía de Seguros y Reaseguros (Chubb Perú) (Lima, Perú). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Chubb Perú’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
Chubb Perú initiated operations in 1998 as Altas Cumbres; in 2007, it was acquired by ACE Group and branded ACE Seguros S.A., until 2016, when its name was changed to Chubb Seguros Perú S.A. following the acquisition of The Chubb Corporation by ACE Limited.
The company has a diversified book of business, distributed through a mix of traditional and massive channels, such as large regional retailers and banks. Currently, its business portfolio is composed of 52% property/casualty, 32% life, and 16% accident and health. As of September 2019, Chubb Perú is the tenth-largest insurance operation in the country, with a market share of 1.7%.
AM Best considers Chubb Perú’s balance sheet strength as very strong, as the company has a defined risk appetite that limits its exposures and protects its solid capital base through adequate investment, reinsurance and underwriting principles. Additionally, the company has a comprehensive reinsurance program with its affiliate, Chubb Tempest Reinsurance Ltd. In 2018, the implementation of the new methodology for the calculation of unearned premium reserve took place resulting in an excess of reserve of PEN5.7 million reclassified to accumulated results, reinforcing the capital position of the company.
The 2018 year-end results reflect the better performance of Chubb Perú in comparison with 2017, when the company faced several claim events. Underwriting performance remains adequate, with a combined ratio of 77.9%; while the company’s upward trend in net premium growth has materialized in an upward trend in results for 2018, AM Best expects to see further continuation of this trend in years to come. September 2019 results reflected a positive trend in net income, driven by improvements in the expense ratio.
The company benefits from its integration into the group, gaining operational advantage through the same systems, procedures and ERM practices. The group has demonstrated its support to Chubb Perú by providing a comprehensive reinsurance program with its affiliate and actively overlooking its strategy.
Positive rating actions could take place in the medium term if the company is able to reach its desired results, reflecting in a capital base that is able to sustain a balance sheet assessment of strongest. A sharp deterioration in operating performance or a significant weakening of its risk-adjusted capitalization could lead to negative rating actions. The ratings could be downgraded if AM Best determines that Chubb Peru’s strategic importance to its group has diminished.
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 Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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