The rating upgrades reflect the financial strength of MAPFRE Fianzas, the support received from MAPFRE S.A., MAPFRE Fianzas’ role as a complementary business line of
MAPFRE Fianzas is the 10th largest insurer in Mexico’s surety industry based on gross premium written. The company’s portfolio is composed of 91% administrative, 5% judicial, 3% fidelity and 1% credit. MAPFRE Fianzas’ corporate practices are in line with
MAPFRE Fianzas’ risk-adjusted capitalization improved in 2015 due to its retention of profits and moderate premium growth during the year; however, it remains exposed to important business risk derived from contingent claims that represented 38% of its reported surplus compared with the industry norm of approximately 15%. This exposure could lead to unexpected impacts in profitability and deterioration of its capital base. Such scenarios have been incorporated into the rating and present a key point to review in years to follow.
For 2015, the company presented a 3.7% growth rate, in line with that of the industry and maintained a similar operating performance to 2014. As of
The company’s relative low premium volume makes it more vulnerable to adverse market conditions and claims deviations, which limits A.M. Best’s view of the ratings. A good reinsurance program provided by its affiliates, MAPFRE RE, Compañía de
Positive rating actions could occur if MAPFRE Fianzas continues to improve its underwriting quality, resulting in larger premium sufficiency, while at the same time continuing to achieve its growth targets in conjunction with consistent risk-adjusted capitalization measures. Positive rating actions on its ultimate parent, MAPFRE S.A., could also result in positive rating actions on MAPFRE Fianzas. Negative rating actions could occur if MAPFRE Fianzas’ profitability is affected by material contingent claims or a higher cost structure that erodes its level of risk-adjusted capitalization to a level that no longer supports the current ratings. In addition, negative rating actions on its ultimate parent could result in a downward movement of MAPFRE Fianzas’ 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
Sept. 5, 2014)
- Rating Surety Companies (Version
Aug. 13, 2014)
- Evaluating Country Risk (Version
May 2, 2012)
Insurance Holding Companyand Debt Ratings ( May 6, 2014)
- Rating Members of Insurance Groups (Version
Dec. 15, 2014)
- Risk Management and the Rating Process for Insurance Companies (Version
April 2, 2013)
- Understanding Universal BCAR (Version
April 28, 2016)
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. 7, 2015.
- Date of Financial Data Used:
Sep. 30, 2016.
This press release relates to rating(s) that have been published on
While the information obtained from the material source(s) is believed to be reliable, its accuracy is not guaranteed.
A.M. Best’s credit ratings are independent and objective opinions, not statements of fact.
Copyright © 2016 by A.M. Best Rating Services, Inc. and/or its subsidiaries. ALL RIGHTS RESERVED.
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