AM Best


A.M. Best Affirms Credit Ratings of Armour Secure Insurance S.A. de C.V.


CONTACTS:

Olga Rubo
Associate Financial Analyst
+52 55 1102 2720, ext. 134
olga.rubo@ambest.com

Alfonso Novelo
Senior Director, Analytics
+52 55 1102 2720, ext. 107
alfonso.novelo@ambest.com
Christopher Sharkey
Manager, Public Relations
(908) 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
(908) 439 2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

MEXICO CITY - NOVEMBER 02, 2018 04:21 PM (EDT)
A.M. Best has affirmed the Financial Strength Rating of B (Fair), the Long-Term Issuer Credit Rating of “bb” and the Mexico National Scale Rating of “a.MX” of Armour Secure Insurance S.A. de C.V. (Armour) (Mexico). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Armour’s balance sheet strength, which A.M. Best categorizes as weak, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.

The ratings also reflect Armour’s strong risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), strong operating performance and solid reinsurance program. Considerably offsetting these positive factors are the high financial leverage and low capitalization, based on the BCAR score, of its holding company, Trebuchet Group Holdings Limited (formerly Armour Group Holdings Limited), which could pressure Armour’s financial flexibility. In addition, despite being a market leader in the title insurance segment, the company’s small market share in Mexico’s overall insurance industry and concentration in a single line of business counteract the company’s strengths.

Armour was authorized in 2014 by Mexico’s Minister of Finance after acquiring the former Fidelity National Title de Mexico, S.A. de C.V. The company underwrites just title insurance and is the market leader in terms of gross written premiums in a non-saturated market that consists of two participants.

Armour had a strong risk-adjusted capital position, as measured by BCAR, at year-end 2017, which is supported by positive bottom-line results and reflected by good and improving profitability metrics. The company’s strong underwriting results are directly linked to the favorable conditions in Mexico’s real estate market.

Armour’s positive trend in operating performance continued in 2017, as the company recorded a combined ratio of 70.9% and a return on equity of 15.7%. Armour’s performance is in line with the title insurance industry, which globally is characterized by high operating expenses. Moreover, the company maintains an adequate reinsurance program placed entirely with a Lloyd’s syndicate.

Key rating drivers that could lead to negative rating actions include a sustained deterioration in operating performance resulting from adverse real estate market conditions or a significant decline in its risk-adjusted capitalization to levels no longer supportive of the current ratings. Key factors that could lead to positive rating actions for Armour include a considerable reduction in financial leverage and improvements in the capitalization level at its holding company.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Key insurance criteria reports utilized:


  • Available Capital & Holding Company Analysis (Version Oct 13, 2017)

  • Evaluating Country Risk (Version Oct 13, 2017)

  • Evaluating U.S. Surplus Notes (Version Oct. 13, 2017)

  • Rating Title Insurance Companies (Version Aug 17, 2018)

  • Understanding Universal BCAR (Version May 14, 2018)

  • A.M. Best’s Ratings On a National Scale (Version Oct 13, 2017)

View a general description of the policies and procedures used to determine credit ratings. For information on the meaning of ratings, structure, voting and the committee process for determining the ratings and monitoring activities, please refer to Understanding Best’s Credit Ratings.


  • Previous Rating Date: Oct. 27, 2017

  • Date of Financial Data Used: Dec. 31, 2017

This press release relates to rating(s) that have been published on A.M. Best’s website. For additional 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 A.M. Best’s Recent Rating Activity web page.

A.M. Best does not validate or certify the information provided by the client in order to issue a credit rating.

While the information obtained from the material source(s) is believed to be reliable, its accuracy is not guaranteed. A.M. Best does not audit the company’s financial records or statements, or otherwise independently verify the accuracy and reliability of the information; therefore, A.M. Best cannot attest as to the accuracy of the information provided.

A.M. Best’s credit ratings are independent and objective opinions, not statements of fact. A.M. Best is not an Investment Advisor, does not offer investment advice of any kind, nor does the company or its Ratings Analysts offer any form of structuring or financial advice. A.M. Best’s credit opinions are not recommendations to buy, sell or hold securities, or to make any other investment decisions. View our entire notice for complete details.

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A.M. Best is a global rating agency and information provider with a unique focus on the insurance industry.


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