Best’s News & Research Service - February 05, 2021 12:55 PM (EST)
AM Best Revises Outlooks to Positive, Affirms Credit Ratings of Grupo Mexicano de Seguros, S.A. de C.V.
- February 05, 2021 12:55 PM (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 Grupo Mexicano de Seguros, S.A. de C.V. (GMX) (Mexico City, Mexico).
These Credit Ratings (ratings) reflect GMX’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
The ratings also reflect GMX’s improved underwriting practices, a reinsurance program placed with counterparties that have strong levels of security and GMX’s well-planned business strategy. In addition, these ratings also consider GMX’s affiliation with its immediate parent, GMS Valore, S.A. de C.V., which provides GMX with synergies and operating efficiencies as a member of this group. Offsetting these positive rating factors is the strong competitive environment GMX experiences in its main business lines, which could pressure future underwriting performance.
The company initiated operations in Mexico City in 1998. GMX ranked sixth in Mexico’s property/casualty insurance segment with 4.8% market share as of September 2020, based on direct premiums written. The company’s chief business line is personal liability, and it operates mainly through a network of independent agents and promoters, as well as online sales.
GMX has consistently strengthened its capital base as a result of positive bottom line results over the years. The company’s underwriting performance can be characterized by premium sufficiency for over six years. Profitability is achieved by underwriting results and further enhanced by investment income, which has improved in recent years, as GMX’s shifts toward a less conservative strategy, reflecting the greater sophistication of the company’s operations.
During 2020, the company was able to grow despite the soft market conditions, taking advantage of its digital channel and technological capabilities, which allowed the company to operate without interruptions during the COVID-19 pandemic restrictions.
GMX’s management team has a solid track record of implementing strategies and taking advantage of opportunities for innovation in Mexico’s insurance market given the increased competition.
Factors that may lead to positive rating actions include GMX’s ability to maintain its risk-adjusted capitalization at the strongest level, while continuing to grow. Positive rating actions could also occur if GMX is able to maintain premium sufficiency, and that translates into an upward trend of positive bottom line results, or if its internationalization efforts result in steady premium growth that improves geographic diversification and widens the company’s market scope.
Negative rating actions could occur should GMX experience a continued deterioration of underwriting results and that ultimately erodes the company’s capital base and weakens its balance sheet strength.
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:
- Evaluating Country Risk (Version Oct. 13, 2017)
- Understanding Universal BCAR (Version June 11, 2020)
- Catastrophe Analysis in AM Best Ratings Version (Oct. 13, 2017)
- Available Capital & Holding Company Analysis (Version Oct. 13, 2017)
- AM 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: Feb. 13, 2020
- Date Range of Financial Data Used: Dec. 31, 2014-Nov. 31, 2020
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.