Fitch Ratings on Aug. 9 downgraded Colombia-based insurer Seguros de Vida del Estado SA's, or Estado Vida's, national insurance financial strength rating to A+(col) from AA-(col). The outlook is stable.
The rating was downgraded as Fitch has continued to observe the insurer's leverage levels, mainly in the index of earned premiums retained to equity. These levels have been consistently higher than the average of its comparable peers, the rating agency said.
"This is a result of the lower internal capital generation that the insurer shows as well as the high distribution of dividends on results it maintains, which limits the growth of its equity at a pace in line with that recorded in its premium portfolio and its plan of positioning," Fitch said.
The insurer's equity decreased 17.2% as of December 2016 from a combined effect "of a lower internal generation of resources compared to 2015 and the demanding distribution of dividends that it holds for 100% of the results from previous years," Fitch noted, adding that an absence of reinvesting profits will limit the insurer's strengthening and negatively impact leverage levels.