AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) for Seguros Reservas S.A. (Seguros Reservas) (Santo Domingo, Dominican Republic). The outlook for these ratings is stable.
These ratings reflect Seguros Reservas’ strongest level of balance sheet strength, as evaluated by AM Best, along with its strong operating performance, neutral business profile, and appropriate enterprise risk management (ERM).
The company’s balance sheet strength is supported by its risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The ratings also factor in its consistent profitability derived from a diversified business portfolio, controlled underwriting leverage, and its affiliation with Banco de Reservas de la República Dominicana, Banco de Servicios Múltiples (Banco de Reservas), the largest bank in the Dominican Republic.
Challenges to these positive factors include intense competition in the Dominican Republic’s insurance market, which could impact Seguros Reservas’ profitability and market share, its high dividend payout ratios, and an ERM framework that can be further refined.
Seguros Reservas underwrites both life and non-life insurance and is a leading insurer in the Dominican Republic, holding a 17.5% market share as of December 2023.
In 2023, fire insurance was the primary line of business for Seguros Reservas, representing 33% of gross written premium, followed by auto (26%) and group life (12%), with other lines making up the remaining 29%. The company has maintained disciplined underwriting practices in a highly competitive market, consistently achieving profitability that compares favorably with its competitors. Additionally, stable investment income has bolstered positive financial results.
Seguros Reservas’ risk-adjusted capitalization is at the strongest level, as measured by BCAR. Adjusted capital has grown at a compound annual growth rate of 13.8% over the past five years, a trend expected to continue due to sound underwriting, prudent dividend and investment policies, and an effective cost containment strategy. The company also benefits from operating efficiencies associated with Banco de Reservas.
Positive rating actions could occur if Seguros Reservas continues to grow its capital base in the medium term, supporting its current level of risk-adjusted capitalization and successfully consolidating its business strategy. Conversely, negative rating actions could result from a deterioration in the company’s risk-adjusted capitalization or sustained underperformance in its operating metrics.
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