Fitch Ratings on Dec. 22 affirmed the national scale financial strength rating of Reaseguradora Santo Domingo SA at BB+(dom) with a stable outlook.
The rating is based on the adequate performance of the firm's portfolio of written premiums, which has partially offset efficiency levels that show room for improvement, Fitch said.
Although the reinsuer's capital and leverage levels are sufficient to support its growth strategy, the company's main challenge is to reverse a trend of declining profitability, considering the strong contraction in its portfolio of premiums since 2015.
The firm's performance has been negatively affected by lower commissions and rising administrative costs, combined with a lower base of premiums due to the lack of policy renewals in certain business lines, Fitch noted.
Finally, the company has important equity exposure to catastrophic events, but capital increases have helped to balance this risk and its asset coverage is adequate.