Best’s News & Research Service - January 11, 2018 01:32 PM (EST)
A.M. Best Affirms Credit Ratings of Grupo Mexicano de Seguros, S.A. de C.V.
- January 11, 2018 01:32 PM (EST)
Mexico City //BestWire// - A.M. Best has affirmed the Financial Strength Rating (FSR) of B++ (Good), the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb” and the Mexico National Scale Rating (NSR) of “aa.MX” of Grupo Mexicano de Seguros, S.A. de C.V. (GMX) (Mexico City, Mexico). The outlook of the FSR is stable, while the outlook of the Long-Term ICR and the NSR remains positive.
The Credit Ratings (Ratings) reflect GMX’s balance sheet strength, which A.M. Best categorizes as strong, as well as its adequate operating performance, neutral business profile and adequate enterprise risk management.
The ratings also reflect GMX’s improved underwriting practices and reinsurance program placed among counterparties with a strong level of security and a well-planned business strategy, in line with a strong risk-adjusted capitalization level, as well as GMX’s affiliation with its immediate parent, GMS Valore, S.A. de C.V. (formerly Grupo Maxasem), which includes the synergies and operating efficiencies the company benefits from as a member of this group. Offsetting these positive rating factors are the strong competitive environment GMX experiences in its main business lines that could pressure future underwriting performance.
The company initiated operations in Mexico City in 1998. GMX underwrites property/casualty insurance and ranked tenth in this segment, with 3.4% market share based on written premiums, as of June 2017. The company’s main business line is personal liabilities, and it operates mainly through a network of independent agents and promoters, as well as online sales.
During 2016, the company improved underwriting results through an important increase in premiums, in conjunction with continued positive performance of its liabilities segment, thus, enhancing overall profitability, as demonstrated by improvements in 2016 and expected 2017 combined ratios. Furthermore, adjustments to the company’s reinsurance program have reduced retention levels on fire and other catastrophe lines of business, which also contributed to reduce the volatility in underwriting results. A.M. Best expects GMX to maintain improved profitability metrics in the medium term.
GMX’s management team has a solid track record in terms of implementing strategy and taking advantage of opportunities for innovation in Mexico’s insurance market given the increased competition.
GMX’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), improved and is supportive of its current ratings.
Factors that may lead to rating enhancements include sustained improvement in the company’s underwriting performance and material enhancements in its risk-adjusted capitalization.
Factors that may lead to negative rating actions include continued deterioration of underwriting results, a decline in balance sheet strength, according to BCAR, or a substantial and sustained lack of coverage for regulatory capital requirements.
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:
- Evaluating Country Risk (Version Oct. 13, 2017)
- Understanding Universal BCAR (Version Oct. 13, 2017)
- Catastrophe Analysis in A.M. Best Ratings (Version Oct. 13, 2017)
- Available Capital & Holding Company Analysis (Version Oct. 13, 2017)
- 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: Dec. 20, 2016 (FSR and Long-Term ICR); Oct. 13, 2017 (NSR)
- Date of Financial Data Used: Sept. 30, 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.
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