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28 October 2024News

Colombian energy captive has ratings affirmed

The captive insurer owned by Colombia’s largest energy producer has had its A- financial strength rating affirmed by AM Best. 

The ratings agency said the outlook of Bermuda-based Maxseguros EPM is stable. Maxseguros is a single-parent captive insurer wholly owned by Empresas Públicas de Medellín (EPM). 

AM Best said the ratings reflected Maxseguros’ balance sheet strength, which AM Best assessed as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

“The ratings recognise the important role of the company within its corporate parent structure, Empresas Públicas de Medellín, which is owned by the Colombian municipality of Medellín. EPM is the largest power generation and multiutility company in Colombia. 

“Maxseguros is a single-parent captive insurer wholly owned by EPM and provides reinsurance to the EPM group, covering property damage and business interruption, commercial crime, cyber risk, directors and officers, errors and omissions and general liability exposures.”

It added: “These positive rating factors are offset partially by EPM’s substantial financial leverage and Maxseguros’ limited business and market scope, which is mitigated somewhat by Maxseguros’ stable results, favourable geographic spread of risk and its history of growing its surplus position.

“Additionally, while Maxseguros depends on reinsurance, the company’s well-set underwriting and technical capabilities have allowed it to position itself as a key participant within EPM’s reinsurance panel.”

The stable outlook reflected Maxseguros’ role within EPM's strategy, which results in financial flexibility for its balance sheet strength, as well as operating synergies that support profitable growth. 

“This has been proven by Maxseguros’ capacity to adjust its retentions, while maintaining consistent operating performance without any adverse effect on its capitalisation,” the ratings agency said. “AM Best has a favourable view of Maxseguros’ overall profile within EPM’s structure; however, EPM’s credit profile and financial leverage remain key factors for future reviews of Maxseguros.”

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