AM Best Revises Issuer Credit Rating Outlook to Negative for AVLA Seguros de Crédito y Garantía S.A.

AM Best has revised the outlook to negative from stable for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term ICR of “bbb+” of AVLA Seguros de Crédito y Garantía S.A. (AVLA) (Chile). The outlook of the FSR is stable.

The ratings reflect AVLA’s balance sheet strength, which AM Best categorizes as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

AVLA began operations in Chile in 2013 as AVALCHILE, before changing its name to AVLA in 2016. The company is majority owned by Inversiones AVLA Seguros S.A., which holds a 90.27% stake, with the remaining 9.73% held by the group’s ultimate parent, AVLA S.A. The company specializes in financial guarantees, credit insurance and surety; it ranks first in Chile in surety and financial guarantees and third in credit insurance in terms of market share.

AVLA’s business profile is considered neutral. Since its creation in 2013, AVLA has successfully become one of the main participants in Chile’s market for credit insurance and financial guarantees, but business opportunities and revenue have been limited by economic developments, including social unrest in 2019 and the COVID-19 pandemic. In AM Best’s view, management’s capabilities will remain key to adjust its product offering amid challenging market conditions.

AM Best views the company’s operating performance as adequate, although results in 2020 have been limited by lower revenue from premiums and studies related to them as well by significant claims. The economic toll of the pandemic, in addition to already pressured economic growth, have limited growth prospects in the segments in which the company operates. For 2021, AM Best will continue to monitor AVLA’s results and underwriting quality as Chile’s economic recovery takes place. The continuation of the 2020 results and the gradual recovery of Chile’s economy are still key concerns for the rating going forward.

AVLA’s balance sheet assessment is strong given its solid capital base for the risks it undertakes, as reflected in its very strong level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). However, financial leverage at its holding company level limits AM Best’s view of balance sheet strength to strong, given the relevance of the company to its parent in terms of revenue and profits. The strong assessment also recognizes the willingness and proven history of capital contributions made by its shareholders to support AVLA’s growth, the latest one taking place in 2020, which was equivalent to 11% of its reported equity at year-end 2019.

The negative Long-Term ICR outlook recognizes the dire conditions within Chile’s surety, guarantee and credit insurance segments in which the company operates, which resulted in losses and lower revenue during 2020 and may continue to have an impact in 2021.

Positive rating actions could take place in the medium term if the holding company’s (AVLA S.A.) influence becomes neutral or if there is less financial leverage. Negative rating actions could take place if the company’s business scope continues to affect operating performance into 2021, especially so if its capital position is affected by a continuation of negative bottom line results.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

Copyright © 2021 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.


Elí Sánchez
Associate Director
+52 55 1102 2720, ext. 122

Alfonso Novelo
Senior Director, Analytics
+52 55 1102 2720, ext. 107

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