Best’s News & Research Service - March 04, 2022 04:35 PM (EST)
AM Best Revises Outlooks to Stable, Affirms Credit Ratings of Insignia Life S.A. de C.V.
- March 04, 2022 04:35 PM (EST)
Mexico City //BestWire// - AM Best has revised the outlooks to stable from positive and affirmed the Financial Strength Rating of B+ (Good), the Long-Term Issuer Credit Rating of “bbb-” (Good) and the Mexico National Scale Rating of “aa-.MX” (Superior) of Insignia Life S.A. de C.V. (Insignia) (Mexico).
The Credit Ratings (ratings) reflect Insignia’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The revised outlooks to stable from positive reflect the challenges that Insignia faces as a life insurer in Mexico, which include increased competition and a rise in claims activity. The stable outlooks also recognize Insignia’s capabilities and efforts to improve its underwriting metrics and achieve its growth targets during 2022.
Insignia (est. Mexico 2008) underwrites individual and group life insurance through a commercial network of more than 3,000 agents and 10 offices distributed throughout Mexico. Insignia’s growth strategy has been supported by advertising and incentives for employees and agents, allowing for premium growth well above the market’s rate.
Insignia’s balance sheet strength reflects the improvement of its risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), as a result of capital contributions carried in 2019, in March 2020 and October 2021. Shareholder’s commitment to the company’s growth and strategy are key factors of the ratings. Offsetting these positive rating factors is Insignia’s holding company’s high financial leverage.
During 2021, COVID-19-related claims affected Insignia’s technical results, causing a spike in loss ratio. The company has enhanced its underwriting and ERM procedures to improve its underwriting results and manage the ongoing evolution of the pandemic. Insignia also expects COVID-19-related claims to decrease gradually, as the vaccination process further progresses in the country, allowing the combined ratio to converge toward premium sufficiency levels in the medium term.
The ratings also consider Insignia’s sound underwriting practices, a highly experienced management team and ongoing improvements in ERM. 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 a sustained improvement in its risk-adjusted capitalization, reflective of a strengthened and stable capital base. Positive rating actions also could occur from lower financial leverage at the holding company level.
Negative rating actions also could take place if there is a constant deterioration of Insignia’s underwriting quality and bottom-line results that significantly eroded the company’s capital base to a point where it is no longer supportive of the current ratings.
The methodology used in determining these ratings is Best’s Credit Rating Methodology (Version Nov. 13, 2020), 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 Global BCAR (Version July 22, 2021)
- 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: March 5, 2021
- Date Range of Financial Data Used: Dec. 31, 2015-Dec. 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.