A.M. Best Upgrades Credit Ratings of General de Seguros S.A.B.
October 11 2018 - 3:00PM
Business Wire
A.M. Best has upgraded the Financial Strength Rating to
A- (Excellent) from B++ (Good), the Long-Term Issuer Credit Rating
to “a-” from “bbb+”, and the Mexico National Scale Rating (NSR) to
“aaa.MX” from “aa+.MX" of General de Seguros S.A.B. (Genseg)
(Mexico City, Mexico). The outlook of these Credit Ratings
(ratings) is stable.
The ratings reflect Genseg’s balance sheet strength, which A.M.
Best categorizes as strongest, as well as its marginal operating
performance, neutral business profile and appropriate enterprise
risk management (ERM).
The rating upgrades reflect Genseg’s balance sheet strength that
is underpinned by risk-adjusted capitalization at the strongest
level, as measured by Best’s Capital Adequacy Ratio (BCAR),
improving underwriting results, consistent inflow of investment
income, experienced management team and solid reinsurance program.
The ratings also recognize Genseg’s affiliation and strategic
importance to its ultimate parent, Peña Verde, S.A.B., a
leading group in Mexico’s (re)insurance industry, which provides
synergies and operating efficiencies. Partially offsetting these
positive rating factors is the strong competitive landscape in its
main business lines. Genseg initiated operations in Mexico City in
1970. The company mainly underwrites motor, agriculture and life
insurance. The company ranked as Mexico’s 26th largest insurer in
2017 with a market share of 0.57%. Genseg operates with a network
of independent agents, brokers and commercial offices throughout
Mexico.
The company has increased capital and surplus consistently at a
compound annual growth rate of 5.7% over the past five years. The
company’s capitalization is further supported by a reinsurance
program with highly rated entities. The company’s capitalization
and liquidity have provided Genseg with flexibility in order to
cover deviations in claims or volatile securities market conditions
without having to realize losses in its investment portfolio. In
2017, Genseg’s profitability continued to depend on investment
income.
Moreover, stable claims containment within Genseg´s motor
insurance line, coupled with positive effects of reserves release
derived from the implementation of Solvency II-type regulation,
continue to improve underwriting practices and have positively
impacted operating performance as reflected by combined ratios
converging towards 100% at year-end 2017. A.M. Best expects Genseg
to sustain this trend through year-end 2018, despite challenges
arising from a very competitive and maturing market.
Factors that may trigger positive rating actions include stable
profitability metrics performing in line with higher rated peers
and good short-term performance in its motor business. The
company’s current ratings could come under pressure should soft
market conditions continue and if a lack of underwriting discipline
generates results and overall profitability that fall short of A.M.
Best’s expectations or if capitalization is no longer supportive of
the current ratings.
The methodology used in determining these ratings is Best’s
Credit Rating Methodology, which provides a comprehensive
explanation of A.M. 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:
- A.M. Best´s Ratings on a National Scale
(Version Oct. 13, 2017)
- Available Capital & Holding Company
Analysis (Version Oct. 13, 2017)
- Catastrophe Analysis in A.M. Best
Ratings (Version Oct. 13, 2017)
- Evaluating Country Risk (Version Oct.
13, 2017)
- Understanding Universal BCAR (Version
May 14, 2018)
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
Understanding Best’s Credit Ratings.
- Previous Rating Date: Oct. 5, 2017 (FSR
and Long-Term ICR); Oct. 13, 2017 (NSR)
- Date of Financial Data Used: June 30,
2018
This press release relates to Credit Ratings that have been
published on A.M. Best’s website. For all 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 A.M.
Best’s Recent Rating Activity web page. For
additional information regarding the use and limitations of Credit
Rating opinions, please view Understanding Best’s Credit
Ratings. For information on the proper media use of Best’s
Credit Ratings and A.M. Best press releases, please view
Guide for Media - Proper Use of Best’s Credit Ratings and A.M.
Best Rating Action Press Releases.
A.M. Best is a global rating agency and information provider
with a unique focus on the insurance industry. Visit
www.ambest.com for more information.
Copyright © 2018 by A.M. Best Rating Services, Inc. and/or
its affiliates. ALL RIGHTS RESERVED.
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A.M. BestSalvador SmithFinancial
Analyst+52 55 1102 2720, ext.
109salvador.smith@ambest.comorChristopher
SharkeyManager, Public Relations+1 908 439 2200, ext.
5159christopher.sharkey@ambest.comorAlfonso
NoveloSenior Director, Analytics+52 55 1102 2720,
ext. 107alfonso.novelo@ambest.comorJim PeavyDirector,
Public Relations+1 908 439 2200, ext.
5644james.peavy@ambest.com