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FOR IMMEDIATE RELEASE
MEXICO CITY - SEPTEMBER 27, 2024 12:13 PM (EDT)
AM Best has affirmed the Financial Strength Rating of A- (Excellent), the Long-Term Issuer Credit Rating of “a-” (Excellent) and the Mexico National Scale Rating of “aaa.MX” (Exceptional) of Stewart Title Guaranty de México, S.A. de C.V. (STGM) (Mexico). The outlook of these Credit Ratings (ratings) is stable.
STGM is a member of Stewart Title Group (Stewart), which on a consolidated basis, has a balance sheet strength that AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
The ratings also reflect the integration of STGM into its parent company, Stewart Title Guaranty Company (STGC) (Houston, TX), and into the group in terms of business model and operational support.
In addition to Mexico, STGC offers products through its subsidiaries to markets in the United States, the European Union, Australia, Costa Rica and China. Given the specialized nature of the title insurance product and the institutional strategy, STGM’s sales efforts focus on business referred by STCG on existing customers, which generates a limited number of policies per year.
The company’s capital and surplus has shown a downward growth trend, driven by dividend payments from accumulated retained earnings. Support from STGC in the past has come through capital injections, with the most recent one in 2012, directed to help strengthen the business when required.
STGM’s book of business has contracted for second consecutive year; however, its flexible cost structure continues to provide significant advantages that allow it to optimize expenses and achieve positive bottom-line results, further strengthened by investment income.
For year-end 2024, AM Best expects STGM to maintain its operating performance, supported by its referred business system, while continuing to achieve good underwriting metrics.
Negative rating actions could occur if challenges from rising interest rates and a slowing economy pose a significant decline in STGM’s operating profitability, or a material decline in its risk-adjusted capitalization levels. Additionally, if negative rating actions are taken on the holding company, as a result of liquidity issues or a significant increase in leverage, the ratings of STGM would move in tandem. Conversely, positive rating actions on the group from significant improvements in operating profitability or a material increase in risk-adjusted capitalization levels would prompt the ratings of STGM to move in tandem.
The methodology used in determining these ratings is Best’s Credit Rating Methodology (Version Aug. 29, 2024), 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:
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