Best’s News & Research Service - March 05, 2020 11:16 AM (EST)
AM Best Revises Outlooks to Positive for Insignia Life S.A. de C.V.
- March 05, 2020 11:16 AM (EST)
Mexico City //BestWire// - AM Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating of B+ (Good), the Long-Term Issuer Credit Rating of “bbb-” and the Mexico National Scale Rating of “aa-.MX” of Insignia Life S.A. de C.V. (Insignia) (Mexico).
The Credit Ratings (ratings) reflect Insignia’s balance sheet strength, which AM Best categorizes as adequate, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The revised outlooks to positive from stable reflect a substantial capital injection received from its holding company, Proyecto Insignia, S.A.P.I. de C.V. Therefore, Insignia’s risk-adjusted capitalization, as measured by Best Capital Adequacy Ratio (BCAR), strengthened in 2019 as a result of this capital infusion and was enhanced further by the reinvestment of earnings. The previous pressure on capitalization in 2018, derived from the company’s investment in systems, decreased in 2019 as the volume of intangible assets was reduced significantly in proportion to Insignia’s capital base, again partially due to the capital infusion.
The ratings also consider sound underwriting practices, a highly experienced management team and ongoing improvements in ERM. Offsetting these positive rating factors is the company’s relatively small size within Mexico’s life insurance industry.
Insignia initiated operations in Mexico in 2008. The company underwrites individual and group life insurance. Insignia operates through a commercial network of more than 3,000 agents and 10 offices distributed throughout Mexico.
The improvement in Insignia’s risk-adjusted capitalization, as measured by BCAR, reflects shareholder commitment to the company’s growth strategy providing capital support whenever required. In previous years, Insignia’s holding company carried several capital infusions to the company, allowing it to face challenges and pressures that had befallen the company throughout its history. AM Best expects Insignia to maintain improvements in risk-adjusted capitalization, through reinvestment of earnings, proper management of future investments and consistent profitability.
The company’s investment strategy continues to be conservative and provides a steady flow of revenues to back its operating results. Underwriting practices continue to be characterized by positive bottom-line results in 2019, and are in line with its industry peers. Furthermore, Insignia´s return on assets of 2.3% reflects continued profitability and an increasing asset base.
AM Best expects Insignia to strengthen its ERM framework through ongoing improvements involving systems updates and an internal economic capital model.
Key factors that could lead to positive rating actions for Insignia include sustained improvement in risk-based capital, good underwriting results that translate into sound profitability ratios and a reduction of its dependence on capital injections by its holding company. Key factors that could lead to negative rating actions include substantial deterioration in capitalization, as measured by BCAR, in a short period of time, or diminished capital support from its holding company, as well as deviations from AM Best’s expectation of the company’s improving operating performance.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, 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:
- AM Best’s Ratings On a National Scale (Version Oct. 13, 2017)
- Available Capital and Holding Company Analysis (Version Oct. 13, 2017)
- Evaluating Country Risk (Version Oct. 13, 2017)
- Understanding Universal BCAR (Version May 23, 2019)
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: Feb. 28, 2019
- Date Range of Financial Data Used: Dec. 31, 2013-Dec. 31, 2019
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.
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. 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 media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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 New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.