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AM Best Affirms Credit Ratings of AVLA Seguros de Crédito y Garantía S.A.


AM Best has affirmed the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) of bbb+ of AVLA Seguros de Crdito y Garant­a S.A. (AVLA) (Chile). The outlook of these Credit Ratings (ratings) remains stable.

The ratings reflect AVLAs balance sheet strength, which AM Best categorizes as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

AVLA began operations in Chile in 2013 as AVALCHILE, before changing its name to AVLA in 2016. The company is majority owned by Inversiones AVLA Seguros S.A., which holds a 90.27% stake, with the remaining 9.73% held by the groups ultimate parent, AVLA S.A. The company specializes in financial guarantees, credit insurance and surety, and it ranks No. 1 in Chile in surety and financial guarantees and No. 2 in credit insurance.

AVLAs business profile is considered neutral. Since its creation in 2013, AVLA has successfully become one of the main participants in Chiles market for credit insurance and financial guarantees, but current development of its niche market still leaves room for implementation risk. In AM Bests view, this is mitigated partially by successful implementation to date of its business plan, despite 2019 growth targets being limited by the social unrest in the country.

AM Best views he operating performance of the company as adequate. In 2019, AVLA was able to create efficiencies within its group to distribute its products better and to manage potential adverse credit conditions due to protests in the country during the second half of 2019. As of September 2019, the companys combined ratio was 97%, an improvement to that reported in 2018.

AVLAs balance sheet assessment is strong given its solid capital base for the risks it undertakes, as reflected in its very strong risk-adjusted capitalization. However, financial leverage at its holding company level limits AM Bests view of balance sheet strength to strong, given the relevance of the company to its parent in terms of revenues and profits. The strong assessment also recognizes the willingness and proven history of capital contributions made by its shareholders to support AVLAs growth, the latest one taking place in 2019, which was equivalent to 11% of its reported surplus at year-end 2018.

The stable outlooks recognize the capabilities of the company to maintain a business model that can post profitable results amid social unrest in Chile. The outlooks also recognize the willingness of its shareholders to continue to support the companys growth with capital contributions. In July 2019, Landsberg Investment S.L, owned by Germany-based DEG-Deutsche Investitions-Und Entwicklungsgessellschaft Mbh and Colombia-based Altra Investments II GP, Inc. acquired 38% of AVLA S.A. providing additional capital to support the growth of the company and to improve processes and governance.

Positive rating actions could take place if AVLA is able to further strengthen its capital base, supported by stable operating performance, as reflected in premium sufficiency through stable administrative and claim expenses. Negative rating actions could take place if administrative expenses or claims experience affects the companys profitability. Additionally, if risk-adjusted capitalization falls to levels that no longer support its current ratings, either from excessive growth without further capital contributions or from significant losses that affect the capital position of the company, negative rating actions could take place.

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

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 New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

Copyright 2020 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Elí Sánchez

Associate Director

+52 55 1102 2720, ext. 122

Alfonso Novelo

Senior Director, Analytics

+52 55 1102 2720, ext. 107

Christopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159

Jim Peavy

Director, Public Relations

+1 908 439 2200, ext. 5644

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