Best’s News & Research Service - May 30, 2025 01:46 PM (EDT)
AM Best Affirms Credit Ratings of CESCE México, S.A. de C.V. and CESCE Fianzas México, S.A. de C.V.
- May 30, 2025 01:46 PM (EDT)
//BestWire// - AM Best has affirmed the Financial Strength Rating of B++ (Good), the Long-Term Issuer Credit Ratings of “bbb” (Good) and the Mexico National Scale Rating of “aa.MX” (Superior) of CESCE México, S.A. de C.V. (CESCEM) and its affiliate, CESCE Fianzas México, S.A. de C.V. (CESCEF). The outlook of these Credit Ratings (ratings) is stable. Both companies are domiciled in Mexico City, Mexico.
The ratings of CESCEM and CESCEF reflect the companies’ balance sheet strength, which AM Best assesses as very strong, as well as their marginal operating performance, limited business profile and appropriate enterprise risk management (ERM).
The ratings of CESCEM and CESCEF also reflect their affiliation with Compañía Española de Seguros de Crédito a la Exportación, S.A. Compañía de Seguros y Reaseguros (CESCE), which provides underwriting and business expertise, policies and procedures, and reinsurance support. Partially offsetting these positive rating factors for CESCEM and CESCEF are the competitive market dynamics in Mexico’s credit insurance and surety segments.
CESCEM is 51% owned by CESCE’s subsidiary, Consorcio Internacional de Aseguradores de Credito, S.A. (CIAC), and 49% owned by Banco Nacional de Comercio Exterior, a Mexico-based development bank.
CESCEM specializes exclusively in credit insurance and ranks in the top five of Mexico’s credit insurance segment.
CESCEF began operations in 2011 and is wholly owned by CIAC. CESCEF currently has a small share of Mexico’s surety market. The company’s business portfolio is concentrated almost completely in administrative surety, which is consistent with the portfolios of other market participants.
AM Best assesses the companies’ business profile as limited given their concentration on one business line, with relatively small participation, in very competitive markets.
AM Best assesses the companies’ balance sheet strength as very strong, given their historical strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), denoting sound capitalization levels that effectively cover risk exposures. The companies’ ERM is assessed as appropriate given their well-established practices and defined risk appetites substantially through a conservative underwriting and investment policy, as well as a comprehensive reinsurance program mainly placed with its parent and affiliates, with the remainder placed with high-quality counterparties.
CESCEM’s operating performance assessment remains as marginal. In 2024, the business volume slightly deteriorated, the claim levels returned to historical levels, the acquisition ratio continued benefiting from the inflow of reinsurance commissions, and the administrative ratio increased considerably. Nonetheless, profitability prevailed due to investment income.
CESCEF’s operating performance assessment is marginal due to sustained combined ratios that stand above premium sufficiency levels. The challenging growth environment faced in the surety sector, driven by the low volume of public projects, along with CESCEF’s small market share, increases the vulnerability of the company’s business model. AM Best will monitor the deployment of the company’s strategy to strengthen operating performance and achieve consistent profitability.
CESCEM’s stable outlooks reflect AM Best’s expectation that the company will maintain its balance sheet strength assessment at the very strong level as it continues with its prudent underwriting practices.
Positive rating actions could occur if the company continues achieving a positive trend that denotes steady premium sufficiency in the medium term. Conversely, negative rating actions could occur if CESCEM’s operating performance deteriorates to a level that affects its capital base.
CESCEF’s stable outlooks reflect AM Best’s expectation that the company will maintain its balance sheet strength assessment at the very strong level, in line with prudent underwriting practices, while maintaining its current levels of risk-adjusted capitalization.
Negative rating actions could occur as a result of CESCEF’s negative bottom-line results eroding the company’s capital base, either as a cause of increasing administrative expenses or lower investment income. Although unlikely, positive rating actions could occur if the company achieves a positive trend that denotes steady premium sufficiency in the medium term.
The methodology used in determining these ratings is Best’s Credit Rating Methodology (Version Aug. 29, 2024), 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:
- Best’s National Scale Ratings (Version May 16, 2024)
- Available Capital and Insurance Holding Company Analysis (Version Aug. 15, 2024)
- Evaluating Country Risk (Version June 6, 2024)
- Rating Surety Companies (Version April 25, 2024) (for CESCEF only)
- Scoring and Assessing Innovation (Version Feb. 20, 2025)
- Understanding Global BCAR (Version Aug. 1, 2024)
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, relevant sources of information and the frequency for updating ratings, please refer to Guide to Best’s Credit Ratings.
- Previous Rating Date: May 23, 2024
- Initial Rating Date: Feb. 17, 2016
- Date Range of Financial Data Used: Dec. 31, 2020-March 31, 2025
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