Reuters logo
Fitch Publishes Grupo ASSA's IDR of 'BBB-'; Outlook Stable
April 3, 2017 / 5:35 PM / 8 months ago

Fitch Publishes Grupo ASSA's IDR of 'BBB-'; Outlook Stable

(The following statement was released by the rating agency) MONTERREY/SAN SALVADOR, April 03 (Fitch) Fitch Ratings has published Grupo ASSA, S.A.'s (Grupo ASSA) Long-Term Issuer Default Rating (IDR) of 'BBB-'. A full list of rating actions is at the end of this release. KEY RATING DRIVERS IDRS Grupo ASSA's IDRs reflect mainly the credit profile of its main subsidiary, ASSA Tenedora. ASSA Tenedora is the largest contributor to Grupo ASSA's net income and is the largest source of its cash dividends. This subsidiary stands out for its strong and expanding franchise in the Central America region, especially in Panama, where it is the largest insurance company. It also has a good level of profitability, adequate capitalization and liquidity, as well as extensive reinsurance capacity. VR Grupo ASSA's Viability Rating (VR) is highly influenced by the operating environment of its subsidiaries. The entity has insurance or banking operations in all Central American countries, although Panama is its main market. This exposes the entity to low credit-rated countries with different regulatory environments and uneven financial market development constraining its VR. However, Fitch also believes its diversification provides Grupo ASSA with a high capacity to grow, to generate revenues, and strengthen its franchise. Grupo ASSA's capital position is one of its strengths, reflecting the adequate capitalization of its insurance subsidiaries and its nature as a holding company that does not have individual debt. Its double leverage ratio is low and its capital ratios are favored by the quarterly cash dividends received by its investments. Fitch does not anticipate extraordinary capital requirements from any of the main subsidiaries in the foreseeable future, although growing operations may require retaining a higher proportion of their earnings in order to remain self-sustainable. In Fitch's opinion, Grupo ASSA's investment-grade holdings and the low delinquency ratios at the subsidiaries' level reflect a moderate risk appetite. Loan portfolio quality reveals adequate underwriting standards according to local market conditions. Nevertheless, loan loss reserve coverage is low, reflecting the requirements of local regulations and the collateral coverage provided by its main lending segment, residential mortgages. Funding and liquidity is managed at a subsidiary level. Each subsidiary is accountable for obtaining its own resources and comply with local regulations. In this way, the group's liquidity is less fungible than other investment-grade entities. Grupo ASSA's liquidity would come from its subsidiaries' excess reserves coverage because, in Fitch's opinion, investments available for sale would not be the primary source of liquidity. On an individual basis, Grupo ASSA does not have any financial liabilities. Grupo ASSA's franchise in Central America is strong and continues to grow in the insurance sector with the recent acquisition of AIG's operations in Panama, Guatemala, El Salvador and Honduras. Grupo BDF in Nicaragua holds a relevant market position in specific business segments while La Hipotecaria focuses on mortgage lending in El Salvador, Panama and Colombia. Fitch expects that Grupo ASSA will continue to expand its main business lines, leveraging its reputation in the Central American insurance market. Grupo ASSA's profitability is high and consistent. It is favored by strong income generation from both financial intermediation and insurance and commission revenues. The entity has a good degree of revenue diversification by business line and by country, although the majority of revenue comes from its subsidiaries in Panama and Nicaragua (close to 85%). Its good operating efficiency and the sound quality of its subsidiaries' loan portfolios implies low operating expenses and support its good profitability. The ratings incorporate the view that the company's expected dividend flow structure should continue to be driven by its core investments in Empresa General de Inversiones and Grupo Financiero BG, whose consistent dividend payments account for 70% of dividend inflows, as in 2016 (2015: 62%). SUPPORT RATING AND SUPPORT RATING FLOOR Grupo ASSA's SR and SRF of '5' and 'NF', respectively, indicate that, although possible, external support cannot be relied upon, given the entity's limited systemic importance. RATING SENSITIVITIES IDRs Changes in Grupo ASSA's ratings would reflect modifications in its main subsidiary's performance or risk profile. Negative changes in the ratings could come from a reduction of ASSA Tenedora's contribution to consolidated net income to less than one-third of its consolidated income. VR Grupo ASSA's VR is sensitive to its asset and revenue diversification by country. A significant increase in the relative weight of operations located in non-investment-grade countries could affect Fitch's assessment of the consolidated entity's operating environment and put downward pressure on the ratings. Fitch has taken the following rating actions: Grupo ASSA: --Long-Term IDR published at 'BBB-'; Outlook Stable; --Short-Term IDR assigned at 'F3'; --Viability Rating published at 'bbb-'; --Support assigned at '5'; --Support Rating Floor assigned at 'NF'. Contact: Primary Analyst Ricardo Aguilar Associate Director +52 81 8399 9124 Fitch Mexico S.A. de C.V. Prol. Alfonso Reyes No. 2612, Edificio Connexity, Piso 8 Col. Del Paseo Residencial Monterrey, Nuevo Leon 64920 Secondary Analyst Rolando Martinez Senior Director +503 2516 6619 Committee Chairperson Alejandro Garcia Managing Director +1 212-908-9137 Media Relations: Elizabeth Fogerty, New York, Tel: +1 (212) 908 0526, Email: Summary of Financial Statement Adjustments - Impaired Loans were adjusted to reflect only loans that are overdue by 90 days or more in order to be consistent with Fitch's criteria and global industry practices. Additional information is available on Applicable Criteria Global Bank Rating Criteria (pub. 25 Nov 2016) here Global Non-Bank Financial Institutions Rating Criteria (pub. 10 Mar 2017) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here _id=1021591 Solicitation Status here Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT <a href="">WWW.FITCHRATINGS.COM.. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. DIRECTORS AND SHAREHOLDERS RELEVANT INTERESTS ARE AVAILABLE AT <a href="">HTTPS://WWW. FITCHRATINGS.COM /SITE/REGULATORY. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright © 2017 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch’s factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch’s ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided “as is” without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below