Best’s News & Research Service - August 24, 2017 02:37 PM (EDT)
A.M. Best Upgrades Issuer Credit Rating of Seguros Inbursa S.A. Grupo Financiero Inbursa
- August 24, 2017 02:37 PM (EDT)
Mexico City //BestWire// - A.M. Best has upgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “a+” from “a” and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Mexico National Scale Rating (NSR) of “aaa.MX” of Seguros Inbursa S.A. Grupo Financiero Inbursa (Seguros Inbursa) (Mexico). The outlook of the Long-Term ICR has been revised to stable from positive, while the outlook of the FSR and NSR remain stable.
The upgrade of the Long-Term ICR reflects Seguros Inbursa’s excellent risk-adjusted capitalization and consistent profits supported by a stable flow of investment income, along with low underwriting leverage, a diversified business profile and the company’s affiliation with Grupo Financiero Inbursa S.A.B. de C.V. (Grupo Financiero Inbursa), one of the largest financial groups in Mexico.
Seguros Inbursa writes life and non-life business, and remains one of the largest and most profitable domestic insurance companies in Mexico. Auto insurance was one of the company’s top performing business lines in 2016, a line of business that currently represents 22.8% of gross written premiums. The company has shown disciplined underwriting in a highly competitive market, consistently reporting overall premium sufficiency levels that compare positively among its closest competitors. Seguros Inbursa maintained high claims volume in 2016; however, the company’s strong underwriting policies coupled with the positive effects from non-recurring adjustments derived from the implementation of Solvency II-type regulation helped to maintain its combined ratio below the 100% threshold, standing at 95% in 2016. A.M. Best expects the company’s good underwriting performance to continue in 2017.
Historically, the company has operated with low underwriting leverage. Seguros Inbursa’s risk-based capitalization remains fully supportive of its current Credit Ratings (ratings). Adjusted capital has grown at a compound annual growth rate of 10.8% during the past five years, and A.M. Best expects this trend to continue as a result of sound underwriting, conservative reserves, and dividends and investment policies, as well as an effective cost containment strategy. In addition, Seguros Inbursa continues to benefit from significant operating efficiencies afforded by Grupo Financiero Inbursa’s vast financial and system networks.
Partially offsetting these positive rating factors is the strong competitive environment in Mexico’s insurance market, which A.M. Best believes could pressure the profitability and market share of the company.
Key rating drivers that could lead to positive rating actions for Seguros Inbursa include continued favorable trends in profitability and capital growth. Conversely, sharp deterioration in underwriting results or a significant weakening of its risk-adjusted capitalization, as measured by Best’s Capital Adequacy Model, could trigger negative rating actions.
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 Sept. 5, 2014)
- Catastrophe Analysis in A.M. Best Ratings (Version Nov. 3, 2011)
- Evaluating Non-Insurance Ultimate Parents (Feb. 24, 2012)
- Evaluating Country Risk (Version May 2, 2012)
- Rating Members of Insurance Groups (Version Dec. 15, 2014)
- Risk Management and the Rating Process for Insurance Companies (Version April 2, 2013)
- Understanding Universal BCAR (Version May 1, 2017)
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: Aug. 26, 2016
- Date of Financial Data Used: June 30, 2017
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