A.M. Best Affirms Credit Ratings of Core Traditional Business Subsidiaries of Grupo Catalana Occidente, S.A.


A.M. Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings of a+ of Seguros Catalana Occidente, S.A. de Seguros y Reaseguros (SCO) (Spain), Bilbao, Compa±­a An³nima de Seguros y Reaseguros, S.A. (SB) (Spain) and Plus Ultra Seguros Generales y Vida, S.A. de Seguros y Reaseguros (PU) (Spain). All three companies are wholly owned subsidiaries of Grupo Catalana Occidente, S.A. (GCO), the non-operating holding company of the GCO group, and form the traditional insurance business units of the group. The outlook of these Credit Ratings (ratings) remains stable.

The ratings of SCO reflect its balance sheet strength, which A.M. Best categorises as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management. The ratings also factor in SCOs strategic importance to GCO, as its main operating entity of traditional insurance business. The track record of financial and operational support from GCO is a key factor for the ratings. Furthermore, the ratings of SB and PU reflect their strategic importance to the group.

GCO benefits from a very strong balance sheet, underpinned by an excellent consolidated risk-adjusted capitalisation, supported by solid and sustainable earnings from traditional and credit insurance business. The ratings also incorporate GCOs favourable business profile achieved through its traditional and credit insurance subsidiaries, which are among leaders in their respective markets.

SCOs balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Bests Capital Adequacy Ratio (BCAR). The assessment also factors in SCOs significant exposure to Spanish bonds, which have the potential to introduce volatility. Nonetheless, A.M. Best expects the companys balance sheet strength to remain resilient, supported by its strong earnings, excellent liquidity and the absence of external borrowings. Potential volatility introduced by catastrophe events is reduced significantly due to the protections afforded to the company through the Spanish national scheme, Consorcio de Compensaci³n de Seguros, which covers the majority of catastrophic perils in Spain.

SCO has a track record of generating strong operating performance as evidenced by a five-year (2013-2017) weighted average combined ratio and return on equity of 86.4% and 19.4%, respectively. SCOs technical results were profitable across most non-life and life business segments, despite competitive market conditions, from local and global insurers in the companys domestic market of Spain. The stability in technical earnings is underpinned by the companys extensive agency network, which has been in place for a number of years and allows SCO to tightly manage the underwriting process.

The traditional insurance business units of GCO collectively maintain a strong position in the groups domestic market. SCO is the leading entity within GCOs traditional insurance business unit, writing approximately 26% of GCOs consolidated written premium in 2017. SCO, SB and PU operate exclusively in Spain, and together form a solid and diversified franchise with presence in all of the regions and distribution channels of Spains insurance market. GCO continues to invest in homogenising systems and platforms to take advantage of potential synergies and create future cost savings.

This press release relates to Credit Ratings that have been published on A.M. Bests 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. Bests Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Bests Credit Ratings. For information on the proper media use of Bests Credit Ratings and A.M. Best press releases, please view Guide for Media – Proper Use of Bests Credit Ratings and A.M. Best Rating Action Press Releases.

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