Press Release - OCTOBER 11, 2018

A.M. Best Upgrades Credit Ratings of General de Salud Compañía de Seguros S.A.


CONTACTS:
 Salvador Smith
Financial Analyst
+52 55 1102 2720, ext. 109
salvador.smith@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 11, 2018
A.M. Best has upgraded the Financial Strength Rating to A- (Excellent) from B++ (Good), the Long-Term Issuer Credit Rating to “a-” from “bbb+” and the Mexico National Scale Rating (NSR) to “aaa.MX” from “aa+.MX” of General de Salud Compañía de Seguros S.A. (Gsalud) (Mexico City, Mexico). The outlook of these Credit Ratings (ratings) has been revised to stable from positive.

The ratings reflect Gsalud’s balance sheet strength, which A.M. Best categorizes as strongest, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

The rating upgrades reflect Gsalud’s balance sheet strength that is underpinned by risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), strong underwriting practices and supportive reinsurance program. The ratings also recognize Gsalud’s affiliation and strategic importance to its ultimate parent, Peña Verde, S.A.B., a leading group in Mexico’s (re)insurance industry, which provides synergies and operating efficiencies. Offsetting these positive rating factors are Gsalud’s concentration in one business line and the highly competitive health insurance market.

Gsalud is a fully owned subsidiary of General de Seguros, S.A.B. (General de Seguros) and focused solely on health insurance. The company provides products mainly in the individual and collective health segments, as well as for major medical expenses. Gsalud has used the same distribution channels as General de Seguros, which involves agents, brokers and commercial offices.

Gsalud’s strongest risk-adjusted capitalization is maintained despite its increased risk appetite, as reflected by a higher exposure to shares, which makes the company susceptible to equity risk according to BCAR. Historically, the company’s strong underwriting practices have resulted in positive technical performance with no dependence on investment revenue to achieve positive bottom line. A.M. Best expects the company to maintain this trend. In 2017, Gsalud sustained profitability as reflected in a 22.3% return on equity.

The company’s investment policies are conservative, providing a steady flow of revenue to support its positive operating results. Moreover, the company benefits from being integrated into the Peña Verde, S.A.B. group, gaining operational leverage through common systems, procedures and ERM practices.

A.M. Best expects underwriting results to further reinforce the company’s operating performance, and thus capitalization levels. Factors that may trigger positive rating actions include a continued generation of underwriting earnings that strengthen risk-adjusted capitalization levels. The company’s current ratings could come under pressure should a lack of underwriting discipline result in overall profitability falling short of A.M. Best’s expectations, or if capitalization is 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 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:


  • A.M. Best´s Ratings on a National Scale (Version Oct. 13, 2017)

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

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

  • Understanding Universal BCAR (Version May 14, 2018)

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: Oct. 5, 2017 (FSR and Long-Term ICR); Oct. 13, 2017 (NSR)

  • Date of Financial Data Used: June 30, 2018

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.

A.M. 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. A.M. Best does not audit the company’s financial records or statements, or otherwise independently verify the accuracy and reliability of the information; therefore, A.M. Best cannot attest as to the accuracy of the information provided.

A.M. Best’s credit ratings are independent and objective opinions, not statements of fact. A.M. 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. A.M. 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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A.M. Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit www.ambest.com for more information.


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