Best’s News & Research Service - June 06, 2024 04:50 PM (EDT)
AM Best Revises Issuer Credit Rating Outlook to Positive for Berkley International Seguros Mexico S.A.
- June 06, 2024 04:50 PM (EDT)
//BestWire// - AM Best has revised the outlook to positive from stable for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of A+ (Superior), the Long-Term ICR of “aa-” (Superior) and the Mexico National Scale Rating (NSR) of “aaa.MX” (Exceptional) of Berkley International Seguros Mexico S.A. (BSM) (Mexico City, Mexico). The outlook of the FSR and NSR is stable.
BSM is a member of W. R. Berkley Insurance Group (Berkley Group), which on a consolidated basis has a balance sheet strength that AM Best assesses at the strongest level, as well as strong operating performance, a favorable business profile and appropriate enterprise risk management (ERM).
The Credit Ratings (ratings) reflect BSM’s substantial reinsurance support from its group through the Berkley Insurance Company. Additionally, the ratings factor in BSM’s integration with its parent company, W. R. Berkley Corporation (W. R. Berkley), in terms of underwriting, ERM and capital commitments.
BSM was formed in November 2016, and is the Mexico subsidiary of W. R. Berkley; the company received regulatory approval for operations in June 2017 and issued its first policy in July of that year. The company offers a diversified slate of property/casualty products mainly backed up by treaty and facultative reinsurance contracts with its parent company.
BSM’s strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is derived from its strong capital position, further strengthened by the 95/5 percent quota share and excess of loss contracts provided by its parent. Furthermore, AM Best recognizes W. R. Berkley’s commitment to its subsidiaries through additional capital fungibility to the Mexico operation.
BSM has been able to grow it business volume during the past seven years. BSM’s management and underwriting team have successfully navigated changes in the market’s economic dynamics in recent years. The company continues to take advantage of the reinsurance support received from the Berkley Group, which allowed BSM to generate positive bottom line results in 2023; this marked the fourth time since BSM began operations and was underpinned by premium sufficiency and further strengthened by investment income.
If the ultimate parent’s financial position weakens, requiring the withdrawal of capital from the group’s various insurance companies or leads to increased financial leverage or a decline in interest coverage at the holding company that is not supportive of the current ratings level, negative rating actions could be taken on the Berkley Group, and BSM’s ratings would reflect those actions. If positive rating actions are taken due to the Berkley Group’s operating performance showing continued and sustained outperformance of the “strong” composite and peer benchmarks, BSM ratings would mirror those actions. If negative rating actions are taken on the main operating subsidiaries of the Berkley Group for a significant drop in equity, preventing the organization from maintaining the expected risk-adjusted capitalization levels, BSM’s ratings likely would move in tandem. Negative rating actions also could occur to the insurance operations as a result of a sustained deterioration in BSM’s underwriting or operating results, driven by either current accident year results or adverse development of loss reserves from prior years.
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:
· The Treatment of Terrorism Risk in the Rating Evaluation (Version May 23, 2024)
· Evaluating Country Risk (Version May 4, 2023)
· Understanding Global BCAR (Version March 7, 2024)
· Catastrophe Analysis in AM Best Ratings (Version Feb. 8, 2024)
· Available Capital and Insurance Holding Company Analysis (Version Jan. 18, 2024)
· Best's National Scale Ratings (Version May 16, 2024)
· 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: June 1, 2023
· Initial Rating Date: Feb. 27, 2018
· Date Range of Financial Data Used: Dec. 31, 2018-Dec. 31, 2023
· This latest rating action is the result of an accepted appeal from W. R. Berkley Corporation (W. R. Berkley)
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
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.
If the ratings referred in this press release do not indicate a specific country suffix, it is understood that they are granted globally and not on a national scale.
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.
AM Best receives compensation for interactive rating services provided to organizations that it rates. AM Best may also receive compensation from rated entities for non-rating related services or products offered by AM Best. AM Best does not offer consulting or advisory services. AM Best keeps certain activities of its business units separate from each other to preserve the independence and objectivity of their respective activities. As a result, certain business units of AM Best may have information that is not available to other AM Best business units. AM Best has established policies and procedures to maintain the confidentiality of certain confidential (non-public) information received in connection with each analytical process. For more information regarding AM Best’s rating process, including handling of confidential (non-public) information, independence, and avoidance of conflicts of interest, please read the AM Best Code of Conduct. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments. 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.