Best’s News & Research Service - June 02, 2022 12:35 PM (EDT)
AM Best Affirms Credit Ratings of Allianz México, S.A., Compañía de Seguros
- June 02, 2022 12:35 PM (EDT)
Mexico City //BestWire// - AM Best has affirmed the Financial Strength Rating of A+ (Superior), the Long-Term Issuer Credit Rating of “aa” (Superior), and the Mexico National Scale Rating of “aaa.MX” (Exceptional) of Allianz México, S.A., Compañía de Seguros (Allianz Mexico) (Mexico City, Mexico). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Allianz Mexico’s strategic importance as a subsidiary of Allianz SE that on a consolidated basis has a balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, very favorable business profile and appropriate enterprise risk management (ERM).
The rating actions follow the announcement on 17 May 2022, that Allianz Global Investors U.S. LLC (AGI U.S.), a subsidiary of Allianz SE, has entered into settlements with the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) relating to criminal securities fraud. The settlement agreements highlighted deficiencies in the effectiveness of internal control measures and governance within AGI U.S. As a result, AM Best has revised Allianz SE’s ERM assessment to appropriate from the previous assessment of very strong. AM Best expects the group to undertake decisive measures to address the identified shortcomings in its ERM framework.
The settlement agreements with the DOJ and SEC, which are expected to result in total payments of approximately USD 6 billion (EUR 5.6 billion), resolve uncertainty regarding the financial impact of this matter on the group. Allianz SE had provisioned EUR 3.7 billion at the end of 2021 and EUR 1.9 billion at the end of the first quarter 2022. The group’s strong earnings have allowed it to absorb the financial impact of the settlements. AM Best expects the group to continue to benefit from strong earnings from its diverse operations, including its asset management units.
Allianz Mexico specializes in offering insurance coverages across a broad spectrum of categories in life, property/casualty and accident and health. It is focused solely on Mexico’s market, and the insurance portfolio, as of December 2021, was composed of life (55%), property/casualty (31%), and accident and health (14%). The company manages life administration funds in its life business segment, consisting mainly of investment and savings products.
Allianz Mexico forms part of the IberoLatAm division of Allianz SE, and is identified by the group as one of the key regions of future insurance growth outside its core European markets. Allianz Mexico also is integrated in all core processes of the group and in the ongoing strategic initiatives.
If there are positive rating actions on the main operating subsidiaries of Allianz SE, as a result of a sustained improvement of its operating performance, the ratings of Allianz Mexico likely would move in tandem. Likewise, if there are negative rating actions on the main operating subsidiaries of Allianz SE, as a result of weakening in its risk-adjusted capitalization, or a sustained deterioration of its operating performance, Allianz Mexico’s ratings would mirror those same actions. A change in AM Best’s perception regarding the strategic importance of Allianz Mexico to the group also could impact Allianz Mexico’s ratings.
The methodology used in determining these ratings is Best’s Credit Rating Methodology (Version Nov. 13, 2020), 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:
- Evaluating Country Risk (Version Oct. 13, 2017)
- Understanding Global BCAR (Version July 22, 2021)
- Available Capital & Holding Company Analysis (Version Oct. 13, 2017)
- A.M. Best’s Ratings On a National Scale (Version Oct. 13, 2017)
- Scoring and Assessing Innovation (Version March 5, 2020)
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: Oct. 8, 2021
- Date Range of Financial Data Used: Dec. 31, 2015-Dec. 31, 2021
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.
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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 London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.