AM Best


AM Best Upgrades Issuer Credit Rating of MAPFRE Fianzas, S.A.


CONTACTS:

Elí Sánchez
Senior Financial Analyst
+52 55 1102 2720, ext. 108
eli.sanchez@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 - DECEMBER 14, 2018 11:06 AM (EST)
AM Best has upgraded the Long-Term Issuer Credit Rating to “a+” from “a” and affirmed the Financial Strength Rating of A (Excellent) and the Mexico National Scale Rating of “aaa.MX” to MAPFRE Fianzas, S.A. (MF) (Mexico City, Mexico). The outlook of these Credit Ratings (ratings) remains stable.

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

The Long-Term ICR upgrade reflects MF’s strategic importance to, and strategic alignment with, MAPFRE INTERNACIONAL, S.A., as well as the synergies and operating efficiencies derived from being a group member of MAPFRE S.A., the leading insurer in Spain. The ratings also reflect MF’s role as a complementary business line of MAPFRE MÉXICO S.A. (MM), as well as MF’s good risk-adjusted capitalization, adequate profitability as of December 2017 and solid reinsurance program. Partially offsetting these positive rating factors are the company’s exposure to contingent claims and low participation within the surety market. While MF is a legal subsidiary of MM, its strategy and operations are directed as a boutique business line focused on maintaining market presence and complimenting the services provided by its immediate parent. The company is the 15th largest surety writer in Mexico, based on gross premium written, with its portfolio composed of 86.8% administrative, 10.7% judicial, 1.7% credit and 0.8% fidelity. MF’s corporate practices are in line with MM and MAPFRE S.A.

MF’s risk-adjusted capitalization remained strong in 2017 due to its profit retention and good operating performance during the year. MF also diminished its exposure to business risk derived from contingent claims to 5% of its reported surplus, compared with 15.9% in 2016. This exposure could lead to unexpected impacts on profitability and deterioration of its capital base. Such scenarios have been incorporated into the ratings and present a key point for A.M. Best to review in coming years. The company’s relatively low premium volume makes it vulnerable to adverse market conditions and claims deviations, which limits A.M. Best’s view of the ratings. However, MF’s appropriate reinsurance program, provided by its affiliate, MAPFRE RE, Compañía de Reaseguros, S.A., partially offsets A.M. Best’s view.

In 2017, MF saw a considerably greater contraction of business than that of the industry composite, by 11.7% year over year compared with the composite’s 1%. MF maintained a similar bottom-line result to that of the previous year due to lower administrative costs and better investment income.

Positive rating actions on its ultimate parent, MAPFRE S.A., could result in further positive rating actions for MF. Negative rating actions could occur if MF’s profitability is affected by material contingent claims or a higher cost structure that erodes its level of risk-adjusted capitalization to a level that no longer supports the current ratings. In addition, negative rating actions on its ultimate parent could result in a downward movement of MF’s ratings.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of AM 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:


  • Evaluating Country Risk (Version Oct. 13, 2017)

  • Understanding Universal BCAR (Version May 14, 2018)

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

  • A.M. Best Ratings on National Scale (Version Oct. 13, 2017)

  • Rating Surety Companies (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: Nov. 10, 2017.

  • Date of Financial Data Used: Sept. 20, 2018.

This press release relates to rating(s) that have been published on AM 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 AM Best’s Recent Rating Activity web page.

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

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