Best’s News & Research Service - March 01, 2024 02:22 PM (EST)
AM Best Affirms Credit Ratings of Assurant Daños México, S.A. and Assurant Vida México, S.A.
- March 01, 2024 02:22 PM (EST)
//BestWire// - AM Best has affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a-” (Excellent) of Assurant Daños México, S.A. (ADM) and Assurant Vida México, S.A. (AVM). The outlook of these Credit Ratings (ratings) is positive. AM Best also has affirmed the Mexico National Scale Rating (NSR) of “aaa.MX” (Exceptional) of ADM and AVM. The outlook of the NSR is stable.
The ratings reflect ADM’s and AVM’s balance sheet strength, which AM Best assesses as strong, as well as each company’s adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
The positive outlook on the FSR and Long-Term ICRs reflect AM Best’s expectation that the company’s balance sheet strength will continue to improve, underpinned by positive bottom-line results. The ratings of ADM and AVM also reflect their affiliation and strategic importance to Assurant, Inc., the ultimate parent, as a stepping-stone to grow in the Latin America market. The ratings also consider the solid reinsurance structure mainly supported by the group. ADM and AVM initiated operations in 2004 and are owned by Assurant Holding Mexico, S. de R.L. de C.V., which is part of Assurant, Inc. Distribution for both companies is based on sales through financial institutions, auto companies, telecommunications carriers, retailers and other channels.
ADM and AVM follow their group’s underwriting, ERM and corporate governance practices, receive reinsurance support and benefit from its brand recognition to expand their market share in Mexico. Both subsidiaries also benefit from their group’s capital contributions, when required, in support of growth targets.
In 2022-2023, ADM maintained its balance sheet strength at a strong level as the company continued to strengthen its capital base through the reinvestment of earnings. Premium growth during 2022 benefited from an improvement in sales in the company’s global auto, mobile, home, retail and original equipment manufacture business lines, as well as commercial alliances with high profile distributors. As of December 2023, ADM increased its profitability through positive technical and underwriting results and management expense control, which was supported by an increase in investment income, partially resulting from its strategic asset allocation.
AVM’s balance sheet strength also was at a strong level in 2022-2023, supported primarily by profitability. AVM’s underwriting results also benefited from a reserve release in 2023 mainly due to the annualization of its policies. The company presented positive bottom-line results as of December 2023, backed by profitable underwriting and strengthened by investment income.
Factors that could lead to positive rating actions for ADM and AVM include a sustained reinforcement of its strong balance sheet strength, underpinned by risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), and favorable operating performance. Conversely, negative rating actions could take place if operating performance substantially deteriorates, resulting in a decline in risk-adjusted capitalization to a level no longer supportive of the current ratings.
Negative rating actions also could occur if the subsidiaries’ parental support or their strategic importance to the group deteriorates in AM Best’s view.
The methodology used in determining these ratings is Best’s Credit Rating Methodology (Version Jan. 18, 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 June 15, 2023)
· Available Capital and Insurance Holding Company Analysis (Version Jan. 18, 2024)
· Catastrophe Analysis in AM Best Ratings (Version Feb. 8, 2024) (ADM only)
· Evaluating Country Risk (Version May 4, 2023)
· Understanding Global BCAR (Version July 6, 2023)
· Scoring and Assessing Innovation (Version Feb. 27, 2023)
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: Feb. 23, 2023
· Initial Rating Date: Feb. 25, 2016
· Date Range of Financial Data Used: Dec. 31, 2017-Dec. 31, 2023
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
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