AM Best


AM Best Upgrades Issuer Credit Rating of MAPFRE MÉXICO, 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 11:07 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 MÉXICO, S.A. (MM) (Mexico City, Mexico). The outlook of these Credit Ratings (ratings) remains stable.

The ratings reflect MAPFRE MÉXICO’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 (ERM).

The Long-Term ICR upgrade reflects MM’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.

MM’s ratings reflect its solid risk-adjusted capitalization, its competitive position in Mexico’s insurance industry and adequate ERM practices. Offsetting these positive rating factors is the deterioration in MM’s operating performance in 2016, stemming from its previous strategy to expand its market share.

MM operates as a composite insurer of life and non-life business and ranks among Mexico’s five-largest insurers based on written premiums.

MM’s written premiums in 2017 presented stable growth after adjusting for the biannual property-liabilities policy of Petróleos Mexicanos (PEMEX), a state-owned oil and gas company that MM started underwriting in 2015 and renewed in 2017 for USD 546.3 million of premium.

Net income in 2017 shows a much stronger technical performance than in previous years when it was highly influenced by the release of catastrophe reserves. This resulted from an improvement in underwriting, while the company maintained an adequate adjusted growth rate. Financial income positively influences the net result, which ended up at MXN 33 million. As of September 2018, the company has improved its operating performance, posting a combined ratio slightly above 100%.

The company’s risk-adjusted capitalization is supportive of the current ratings. In 2017, policyholders’ surplus decreased in a steeper manner than net required capital derived from dividend payments to its holding company. In the medium term, A.M. Best expects changes in underwriting strategy to continue reflecting in better net results and therefore in a more robust capital base that could give way to a stronger risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR).

ERM practices are well-established and implemented throughout the company and closely follow those set by MAPFRE S.A. This integration has benefited the company’s implementation of Mexico’s Solvency II-type regulations.

Positive rating actions on its ultimate parent, MAPFRE S.A., also could result in further positive rating actions for MM. Factors that may lead to negative rating actions include weakened risk-adjusted capitalization, either by significant capital outflows or by deterioration of its underwriting quality in subsequent years. In addition, negative rating actions for its ultimate parent would result in a downward movement of MM’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)

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.

AM 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. 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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Related Companies

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AMB# Company Name
091463 MAPFRE México, S.A.
086287 MAPFRE México, S.A.