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FOR IMMEDIATE RELEASE
MEXICO CITY - APRIL 11, 2024 12:04 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 (NSR) of “aaa.MX” (Exceptional) of Seguros El Potosí, S.A. (El Potosí) (San Luis Potosi, Mexico). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect El Potosí’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
El Potosí’s very strong balance sheet strength recognizes the company’s ability to match its obligations adequately with its risk appetite, while implementing its growth strategy and carrying dividend payments to its shareholders. The very strong assessment also recognizes the conservative profile of El Potosí’s investment portfolio and concentration in Mexico fixed income securities.
El Potosí has posted positive bottom-line results historically. The company’s operating performance was impacted in 2022 by claims in the auto line of business, driven by the increase in mobility and traffic, coupled with rising auto part costs due to supply chain disruptions in the automobile industry. The company took measures to improve technical results, and the company returned to premium sufficiency levels in 2023.
AM Best assesses El Potosí’s business profile as neutral. The company underwrites premiums across several states through a mix of distribution channels and has a diversified portfolio of products. However, underwriting risks are concentrated in Mexico. AM Best assesses El Potosí’s ERM as appropriate, as it is well-integrated into its operations. The company has a sound reinsurance program in place with highly rated reinsurers with a high level of security.
The stable outlooks reflect El Potosí’s ability to make adjustments in its underwriting strategy in order to protect its bottom-line results and, consequently, the strength of its capital base.
Positive rating actions could occur if El Potosí is able to strengthen its capital adequacy further while maintaining the strongest level of risk-adjusted capitalization. Negative rating actions could occur if risk-adjusted capitalization deteriorates due to a significant cash withdrawal or a decline in operating results that ultimately translates into an eroded capital base.
The methodology used in determining these ratings is Best’s Credit Rating Methodology (Version Jan. 18, 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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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.