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Fitch downgrades El Salvador's Assa Vida

Fitch Ratings lowered Assa Compañia de Seguros de Vida SA Seguros de Personas' long-term issuer regulatory scale rating for El Salvador to EAA-(slv) from EAA(slv).

The long-term issuer Fitch scale rating was also lowered to AA-(slv) from AA(slv). The outlook is stable.

In downgrading the ratings, Fitch said it believes the insurer will face competition challenges that in turn will impact its efficiency and profitability levels.

At the end of 2018, Assa Vida accounted for 5.5% of total premiums in the country's insurance market, while holding 13.5% of personal insurance. However, this market share will likely shrink, as Assa Vida will no longer have the ability to process some insurance policies for one of the two pension fund managers in El Salvador. Fitch projects the firm's market share for total premiums will fall to 1.6%, while that of personal insurance will be 3.9%.

Given the expected fall in premiums, Fitch said Assa Vida's ability to diversify its income stream will be important. Fitch noted, however, that the company's assets have been strengthened by capital injections and resources absorbed after the integration of AIG Seguros El Salvador SA in 2017.