Moody’s Investors Service has upgraded the outlook of Sura Re from negative to stable, and affirmed the company’s Baa3 global scale insurance financial strength (IFS) ratings.
The decision comes after Moody’s recent revision of Columbia’s local-currency and foreign-currency Baa2 sovereign bond ratings, which it changed from negative to stable on 23 May.
The outlook takes into consideration the close linkages between the credit profile of Sura Re and of Colombia’s sovereign, Moody’s explained.
These are reflected by Sura Re’s strong integration with its Colombian-based parent company, Grupo de Inversiones Suramericana S.A. (unrated), given Sura Re’s status as an integral part of the group’s risk management and risk-retention program.
Analysts noted that the integration between Sura Re and its parent exposes the former to Colombia’s sovereign credit profile and operating environment, given the revenues and business volume coming from that country.
Moody’s said it would consider upgrading Sura Re’s rating further following an upgrade of Colombia’s sovereign bond rating or an improvement in the country’s insurance operating environment, or both.
Sustained improvements in the company’s capital adequacy, asset quality and profitability could also merit an upgrade.
In contrast, factors that could lead to a downgrade of Sura Re’ ratings include a downgrade of the Colombian government’s bond rating or a deterioration in Colombia’s insurance operating environment.
Additionally, Moody’s said it may downgrade ratings based on a decline in the integration of Sura Re within its partent group, or a significant worsening in the company’s business profile, capital adequacy, asset quality or profitability.
