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FOR IMMEDIATE RELEASE
OLDWICK - FEBRUARY 26, 2020 01:55 PM (EST)
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 Virginia Surety Seguros de México S.A. de C.V. (VSSM) (Mexico City, Mexico). The outlook assigned to the Credit Ratings (ratings) is stable.
The ratings reflect VSSM’s balance sheet strength, which AM Best categorizes as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
The ratings reflect the company’s balance sheet strength at strong levels since it began operations in Mexico. The ratings of VSSM also reflect its recent affiliation and strategic importance to Assurant, Inc., the ultimate parent, as well as its risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Partially offsetting these positive rating factors is the small market share of the company, coupled with its startup nature.
VSSM is a subsidiary of Virginia Surety Company, Inc., a general underwriting entity part of The Warranty Group Company. In 2017, The Warranty Group completed a merger agreement with Assurant Inc., with the purpose of combining insurance operations in various jurisdictions, including the operation in Mexico. VSSM started operations in Mexico in January of 2017, underwriting premiums in the property/casualty segment, focused in the auto line of business and other miscellaneous lines of business.
VSSM underwrites specialty products, providing coverage for risks that usually are not underwritten in the traditional automobile insurance. In its miscellaneous lines of business, VSSM mainly offers coverage in case of theft or accidental damage for consumer technology products, such as cell phones, photographic and sound equipment and home appliances, among others. VSSM places its products through its network of business partners, which include manufacturers, distributors and retailers.
VSSM operates under the same management as Assurant Daños México, S.A. and Assurant Vida México, S.A, both subsidiaries of Assurant Inc. These companies operate separately but they do not compete against each other; moreover, VSSM takes advantage of the operational synergies that derive from being part of the Assurant Group. For the first time in its three years of operations, VSSM achieved positive bottom-line results with a return on equity of 4.9%.
Factors that could lead to positive rating actions for VSSM include consistent improvements in operating performance, while maintaining risk-adjusted capitalization metrics at the strongest level. Conversely, negative rating actions could take place if operating performance substantially deteriorates or if an aggressive growth in premiums leads to a drop in risk-adjusted capitalization to a level no longer supportive of the current 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
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 Guide to Best’s Credit Ratings.
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