Best’s News & Research Service - August 31, 2023 04:46 PM (EDT)
AM Best Upgrades Credit Ratings of Grupo Mexicano de Seguros, S.A. de C.V.; Revises Outlooks to Stable
- August 31, 2023 04:46 PM (EDT)
Mexico City //BestWire// - AM Best has upgraded the Financial Strength Rating to A- (Excellent) from B++ (Good), the Long-Term Issuer Credit Rating to “a-” (Excellent) from “bbb+” (Good) and the Mexico National Scale Rating (NSR) to “aaa.MX” (Exceptional) from “aa+.MX” (Superior) of Grupo Mexicano de Seguros, S.A. de C.V. (GMX) (Mexico). The outlooks of these Credit Ratings (ratings) has been revised to stable from positive.
The ratings reflect GMX’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
The stable outlooks reflect AM Best’s expectation that the company will be able to maintain its strong level of operating performance and a very strong balance sheet strength assessment, characterized by premium sufficiency and a prudent capital management.
The ratings upgrade was driven by GMX’s operating performance, which has been characterized by premium sufficiency by a large margin, for over six years. Profitability has been achieved consistently through the company’s underwriting results and further enhanced by investment income, which has improved in recent years, as GMX’s achieves greater sophistication of its asset management and operations.
GMX is a subsidiary of GMS Valore, S.A. de C.V., which provides its subsidiary with synergies and operating efficiencies as a member of this group. The company initiated operations in Mexico City in 1998. GMX is the second largest insurer in Mexico’s property/casualty segment (excluding auto), with a 10% market share as of March 2023, based on direct premiums written. The company’s chief business line is general and professional liability, and it operates mainly through a network of independent agents and promoters, as well as online sales.
GMX has strengthened its capital base consistently as a result of positive bottom-line results over the years, as well as an increasing catastrophe reserve, which have provided the company with the capacity to withstand a significant rise in claims. GMX’s risk-adjusted capitalization stands at the strongest level, according to Best’s Capital Adequacy Ratio (BCAR). The company’s balance sheet is further protected by a thorough reinsurance structure placed with participants with an excellent level of security.
The company has been able to grow continuously during the past seven years, by taking advantage of its digital channel and technology capabilities. 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.
Positive rating actions could occur if the company is able to maintain its risk-adjusted capitalization at the strongest level, further strengthening its capital base through profitable results. Factors that may lead to negative rating actions include a continued deterioration of underwriting results to a level that no longer supports the strong operating assessment and ultimately causes an erosion of the company’s capital base, weakening its balance sheet strength.
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:
- Evaluating Country Risk (Version May 4, 2023)
- Understanding Global BCAR (Version July 6, 2023)
- Catastrophe Analysis in AM Best Ratings (Version March 10, 2023)
- Available Capital & Holding Company Analysis (Version Oct. 13, 2017)
- AM Best’s Ratings On a National Scale (Version June 15, 2023)
- Scoring and Assessing Innovation (Version Feb. 27, 2023)
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, relevant sources of information and the frequency for updating ratings, please refer to Guide to Best’s Credit Ratings.
- Previous Rating Date: Aug. 12, 2022
- Initial Rating Date: July 25, 2013
- Date Range of Financial Data Used: Dec. 31, 2017-March 31, 2023
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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.