AM Best Affirms Credit Ratings of Abarca – Companhia de Seguros S.A.

AMSTERDAM–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” of Abarca – Companhia de Seguros S.A. (Abarca) (Portugal). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Abarca’s balance sheet strength, which AM Best categorises as strong, as well as its adequate operating performance, limited business profile and marginal enterprise risk management.

Abarca’s balance sheet strength is underpinned by its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), which is expected to remain at the strongest level for year-end 2020, albeit with a smaller capital buffer above the requirement for the strongest assessment than was the case in 2019. Abarca reported two large gross claims in 2020 (both under litigation), which increased its counterparty credit risk and reserving risk, leading to a reduction in risk-adjusted capitalisation. The company benefits from a conservative and liquid investment portfolio. Offsetting factors include Abarca’s high dependence on reinsurance, uncertainty surrounding the sufficiency of loss reserves in the absence of loss history, and the company’s small capital base, which has the potential to exacerbate the sensitivity of its solvency position. Prospectively, AM Best will continue to monitor closely any significant claims development, including the outstanding litigations for the two large claims.

The adequate operating performance assessment is based on AM Best’s expectation of stable prospective earnings, given the company’s extensive reinsurance programme, which limits volatility on a net basis. In 2019, the company reported a net profit of EUR 1 million, benefiting from the release of an unexpired risk reserve built up during its first years of operation. For 2020, AM Best expects the company to report a small positive net result, despite an increased loss ratio. AM Best notes that the company has the flexibility to actively manage its portfolio and take mitigating actions should the creditworthiness of a policyholder diminish.

Abarca’s limited business profile assessment reflects its position as a small monoline insurer, focusing entirely on surety insurance in Spain and Portugal. The company has a growing market profile in Spain, where it generates most of its revenue, and a leading position in the smaller Portuguese market. Offsetting rating factors include the company’s geographic and product concentrations, amplified by the highly competitive nature of Spain’s surety market.

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 specialising 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.


Giannina Carbajal Ortiz
Financial Analyst
+31 20 308 5428

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Mathilde Jakobsen
Director, Analytics
+31 20 308 5427

Jim Peavy
Director, Communications
+1 908 439 2200, ext. 5644

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