Fitch Ratings on March 21 downgraded Brazilian insurers Bradesco Seguros SA and Sul América SA, following a similar ratings action on Brazil's sovereign ratings.
Fitch lowered Bradesco Seguros' issuer default ratings to BB, with a stable outlook, from BB+, with a negative outlook. The insurer's downgrade reflects a similar action on its parent, Banco Bradesco SA, which entails the reduced capacity of Bradesco to support the insurer if needed.
Meanwhile, Sul América's long-term issuer default rating was brought down a notch to B+, with a stable outlook, from BB-, with a negative outlook. Its short-term issuer default ratings were affirmed at B.
The downgrade of Sul América's issuer default ratings is due to the downgrade of Brazil's ratings, which ultimately constrain the insurer's ratings through the implicit ratings of its operating company.
The close link between the ratings of Sul América and the sovereign is a result of the full concentration of the insurer's operations in Brazil and its very large Brazilian government securities holdings, Fitch said.