SEPTEMBER 23, 2020 01:29 PM (EDT)

AM Best Affirms Credit Ratings of Stewart Title Guaranty de México, S.A. de C.V.

 Inger Rodriguez
Associate Financial Analyst
+52 55 1102 2720 ext. 108

Eli Sanchez
Associate Director, Analytics
+52 55 1102 2720 ext. 122
Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644


AM Best has affirmed the Financial Strength Rating of A- (Excellent), the Long-Term Issuer Credit Rating of “a-” and the Mexico National Scale Rating of “aaa.MX” of Stewart Title Guaranty de México, S.A. de C.V. (STGM) (Mexico). The outlook of these Credit Ratings (ratings) is stable.

STGM is a member of the Stewart Title Group, which on a consolidated basis has a balance sheet strength that AM Best categorizes as very strong, as well as adequate operating performance, a neutral business profile and appropriate enterprise risk management. The ratings also reflect the integration of the local subsidiary to its parent company, Stewart Title Guaranty Company (STGC), and to the group in terms of the business model and operational support. Offsetting these positive rating factors are the company’s small market share in Mexico’s insurance industry and its concentration in a single line of business.

STGM is a subsidiary of STGC, located in Houston, Texas, which, in addition to Mexico, also offers products through its subsidiaries to markets in the United States, the European Union, Australia, Costa Rica and China. Given the specialized nature of the title product and the institutional strategy, STGM’s sales efforts focus on business referred by the parent company on existing customers, which generates a reduced number of policies per year in a Mexican market consisting of just two participants, including STGM, which holds a 35% market share as of December 2019.

STGM’s capitalization stands at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), with an upward trend in capital and surplus growth during the past five years, mainly driven by consistent positive bottom-line results, with underwriting risk being the main component for required capital. Support from STGC in the past has come through capital injections, with the most-recent one in 2012, directed to help strengthen the business when required.

STGM historically has posted combined ratios well-below the 100% threshold and positive bottom-line results, maintained over the years through the optimization of the company’s business strategy. Return metrics improved in 2019: return on assets stood at 15.7% while return on equity was 26.6%, due to of higher commissions on a greater bulk of new business.

Growth in 2020 has been limited by the closing of public registries and notary offices due to COVID-19, preventing investigation on new business, a core process for underwriting. Nevertheless, STGM has partially offset this effect through its flexible costs structure, nil claims and investment income, derived from the company’s long position in dollars. For the rest of the year, STGM expects to regain usual underwriting operations once public offices reopen, supported by its referred business system.

Positive rating actions on the main operating subsidiaries of Stewart Title Group that result from positive underwriting performance trends, accompanied by growth in risk-adjusted capitalization, will prompt the ratings of STGM to move in tandem. Conversely, negative rating actions on Stewart Title Group due to a significant deterioration in operating performance that results in a decline in risk-adjusted capitalization levels, or if the group experiences liquidity issues, or a significant increase in leverage, will also result in a ratings downgrade for the Mexico subsidiary.

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 .

Key insurance criteria reports utilized:

  • Understanding BCAR of U.S. Property/Casualty Insurers (Version May 28, 2020)

  • Rating Title Insurance Companies (Version July 31, 2020)

  • AM Best’s Ratings On a National Scale (Version Oct. 13, 2017)

  • Scoring and Assessing Innovation (Version March 5, 2020)

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

  • Available Capital & Holding Company Analysis (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 Guide to Best’s Credit Ratings.

  • Previous Rating Date: Aug. 16, 2019

  • Date Range of Financial Data Used: Dec. 31, 2014-June 30, 2020

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.

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AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.

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AMB# Company Name
078087 Stewart Title Guaranty de México SA CV