Best’s News & Research Service - May 27, 2021 04:55 PM (EDT)
AM Best Affirms Credit Ratings of Berkley International Seguros Mexico S.A.
- May 27, 2021 04:55 PM (EDT)
Mexico City //BestWire// - AM Best has affirmed the Financial Strength Rating of A+ (Superior), the Long-Term Issuer Credit Rating of “aa-” (Superior) and the Mexico National Scale Rating of “aaa.MX” (Exceptional) of Berkley International Seguros Mexico S.A. (BSM) (Mexico City, Mexico). The outlook of these Credit Ratings (ratings) 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 as strongest, as well as strong operating performance, a favorable business profile and appropriate enterprise risk management (ERM).
The 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. Limiting the ratings is the inherent risk of a startup company implementing its business plan amid the challenges derived from the weakening of the Mexico’s economy by the COVID-19 pandemic.
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 strongly backed up by treaty and facultative reinsurance contracts with its parent company.
BSM’s solid risk-adjusted capitalization is derived from its strong capital position, in support of its premium growth during its initial years of operation. This was 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 last four years. BSM’s management and underwriting team have been able to successfully navigate the changes in the economic dynamic of the past 14 months; the activities reduction due to quarantine measures impacted BSM claim levels positively, and now, as activities return to normal, the company has made adjustments in pricing and risk selection in order to maintain a stable cost structure. AM Best will continue to monitor the business plan implementation during the course of the year.
If positive rating actions are taken on the main operating subsidiaries of the Berkley Group for improved balance sheet metrics, including improved financial leverage and improved loss reserve development trends for certain lines of business, BSM’s ratings likely would move in tandem. Conversely, if negative rating actions are taken on the Berkley Group, as a result of volatility in the equity markets and leads to a significant drop in equity that prevents the organization from maintaining the expected risk-adjusted capital levels, the ratings of BSM would mirror those same actions. Negative rating actions also could occur to the insurance operations as a result of a sustained deterioration in their underwriting or operating results, driven by either current accident year results or adverse development of loss reserves from prior years. If the financial position of the ultimate parent weakens, requiring the withdrawal of capital from the group’s various insurance companies or increases financial leverage or leads to 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.
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:
- The Treatment of Terrorism Risk in the Rating Evaluation (Version Oct. 15, 2020)
- Evaluating Country Risk (Version Oct. 13, 2017)
- Understanding Universal BCAR (Version March 11, 2021)
- Catastrophe Analysis in A.M. Best Ratings (Version Oct. 13, 2017)
- Available Capital & Holding Company Analysis (Version Oct. 13, 2017)
- A.M. 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: May 19, 2020
- Date Range of Financial Data Used: Dec. 31, 2014-March 31, 2021
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.