A.M. Best Assigns Ratings to Grupo Mexicano de Seguros S.A. de C.V. [Professional Services Close – Up]

A.M. Best Co. has assigned a financial strength rating of B++ (Good) and an issuer credit rating of "bbb" to Grupo Mexicano de Seguros S.A. de C.V. (GMX) (Mexico).

The outlook assigned to both ratings is stable.

The ratings reflect GMX's profitable net results and adequate risk-based capitalization as well as initiatives to improve its operating performance. GMX's consistent levels of positive investment income have resulted in historically favorable earnings that have enabled it to continue to increase its level of surplus. GMX's financial strength is further enhanced by its reinsurance program and liquidity and solvency metrics.

Based on Best's Capital Adequacy Ratio (BCAR), GMX's capitalization is at an adequate level to support its assets and underwriting risks.

GMX has shown disciplined underwriting in a highly competitive market, while its risk-based capitalization remains fully supportive of its current ratings and outlook. GMX's profitability is complemented by consistent levels of investment income, which has enabled it to steadily increase surplus.

Partially offsetting these positive rating factors is GMX's limited financial flexibility, geographic concentration of its business exclusively in Mexico and losses stemming from its property/ casualty book of business. GMX's business concentration makes it vulnerable to regulatory, economic and political influences and volatility. Moreover, GMX will remain challenged to increase its market share while generating consistent earnings in a very competitive and maturing market. Also, the frequency of catastrophic events in the Caribbean presents a substantial level of risk exposure to GMX as it formalizes its risk management program.

Potential positive rating triggers would include sustained improvement in GMX's underwriting results in conjunction with tangible improvements in the Mexican regulatory environment and other country risk metrics. Possible negative rating triggers would include deterioration in the company's underwriting results; and consequently, a decline in its risk-based capitalization.

More information:

ambest.com

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