Press Release - OCTOBER 07, 2019

AM Best Assigns Credit Ratings to Tokio Marine HCC Mexico Compañía Afianzadora, S.A. de C.V.


CONTACTS:
 Olga Rubo, FRM
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
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

MEXICO CITY - OCTOBER 07, 2019
AM Best has assigned a Financial Strength Rating of A (Excellent), a Long-Term Issuer Credit Rating of “a”, and a Mexico National Scale Rating of “aaa.MX” to Tokio Marine HCC Mexico Compañía Afianzadora, S.A. de C.V. (TMHCC Mexico) (Mexico City, Mexico). The outlook assigned to these Credit Ratings (ratings) is stable.

The ratings reflect TMHCC Mexico’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 ratings also reflect TMHCC Mexico’s affiliation with its parent company, Houston Casualty Company (HC), in terms of reinsurance protection, ERM and capital commitments. Limiting the ratings is the inherent risk of a start-up company implementing its business plan, and the potential volatility of Mexico’s economy.

TMHCC Mexico is the Mexican surety subsidiary of HC; the company received regulatory approval for operations in April 2019 and issued its first policy in July 2019. HC and TMHCC Mexico also have a sister company, Tokio Marine Compañía de Seguros, S.A. de C.V. (TMX), which is domiciled in Mexico. TMHCC Mexico will take advantage of TMX’s corporate structure, which will provide additional support to the operation.

The company plans to develop its presence in Mexico through a predominant mix of mostly construction and commercial administrative surety, strongly backed by a comprehensive reinsurance program largely placed with its parent company.

TMHCC Mexico’s very strong balance sheet assessment is derived from its strong capital position in support of its premium growth during its first five years of operation, which is strengthened further by the reinsurance contract predominantly placed with its parent company.

The adequate assessment of TMHCC Mexico’s operating performance reflects its seasoned management and underwriting team, with a successful track record, and the operational leverage the company gains from being integrated into the Tokio Marine Group. However, due to the start-up nature of the company, business plan implementation has to evolve for AM Best to evaluate the company’s operating performance adequately.

As of July 2019, the economic environment for the surety market has remained slow. These conditions could continue amid possible economic volatility, which potentially could limit the growth prospects of the company.

Positive rating actions could take place if the company is able to achieve its commercial goals while posting sound operating performance and maintaining its current risk-adjusted capitalization. Negative rating actions could take place if the company experiences a deterioration of its risk-adjusted capitalization, either by weak operating performance, or by any capital outflows, or if AM Best determines that the strategic importance of the Mexican subsidiary to the Tokio Marine group has decreased.

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 23, 2019)

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

  • Rating New Company Formations (Version Oct. 13, 2017)

  • Rating Surety Companies (Version Oct. 13, 2017)

  • AM 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: Not Rated

  • Date Range of Financial Data Used: July 30, 2019-Sept. 30, 2019

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.

AM Best’s credit ratings are independent and objective opinions, not statements of fact. AM 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. AM 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.

AM Best receives compensation for interactive rating services provided to organizations that it rates. AM Best may also receive compensation from rated entities for non-rating related services or products offered by AM Best. AM Best does not offer consulting or advisory services. For more information regarding AM Best’s rating process, including handling of confidential (non-public) information, independence, and avoidance of conflicts of interest, please read the AM Best Code of Conduct. 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 and information provider with an exclusive focus on the insurance industry.


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