A.M. Best has affirmed the Financial Strength Rating of A-(Excellent) and the Long-Term Issuer Credit Ratings of "a-" of (JM Re) and J. MalucelliSeguradora SA (JM Seguradora) (both domiciled in Brazil). Theoutlook of these Credit Ratings (ratings) remains stable.
The ratings of JM Re and JM Seguradora (collectively JM)reflect the group's strong risk-adjusted capitalization, consistentlyprofitable results and solid business profile as a leading surety reinsurer inBrazil. JM Re is classified as a local reinsurer in Brazil and essentiallyserves as a captive reinsurer of an organization writing surety business formore than twenty years. JM Seguradora is market facing and the leading suretywriter in Brazil, and also writes the DPVAT (motor third-party liability)compulsory auto insurance as part of a pool of insurers. JM derives operationalbenefits from its 49.5% minority shareholder, The Travelers Companies, Inc.These benefits include collaboration on enterprise risk management, employeedevelopment, retrocession placement, claims handling and other operationalfunctions. JM maintains strong leverage and liquidity metrics, and acomprehensive retrocession program that provides additional capacity andreduces the company's overall exposures.
Partially offsetting these positive rating factors is JM'sconcentration risk as essentially a mono-line surety writer in a singlecountry. JM's future plans to mitigate this risk include expansion into relatedlines of business and geographic diversification into other parts of LatinAmerica. Additionally, Brazil's (re)insurance market is becoming increasinglycompetitive, with home-grown and global (re)insurers vying for market share.Despite Brazil's economy beginning to show signs that the economic recessionmight have ended, companies are still seeking international expansion whilekeeping an eye on the under-penetrated domestic insurance market. Surety is oneof the fastest-growing segments in the (re)insurance industry in Brazil.