A.M. Best Affirms Credit Ratings of Armour Secure Insurance S.A. de C.V.

MEXICO CITY--(BUSINESS WIRE)-- A.M. Best has affirmed the Financial Strength Rating of B (Fair), the Long-Term Issuer Credit Rating of “bb” and the Mexico National Scale Rating of “a.MX” of Armour Secure Insurance S.A. de C.V. (Armour) (Mexico). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Armour’s balance sheet strength, which A.M. Best categorizes as weak, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.

The ratings also reflect Armour’s strong risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), strong operating performance and solid reinsurance program. Considerably offsetting these positive factors are the high financial leverage and low capitalization, based on the BCAR score, of its holding company, Trebuchet Group Holdings Limited (formerly Armour Group Holdings Limited), which could pressure Armour’s financial flexibility. In addition, despite being a market leader in the title insurance segment, the company’s small market share in Mexico’s overall insurance industry and concentration in a single line of business counteract the company’s strengths.

Armour was authorized in 2014 by Mexico’s Minister of Finance after acquiring the former Fidelity National Title de Mexico, S.A. de C.V. The company underwrites just title insurance and is the market leader in terms of gross written premiums in a non-saturated market that consists of two participants.

Armour had a strong risk-adjusted capital position, as measured by BCAR, at year-end 2017, which is supported by positive bottom-line results and reflected by good and improving profitability metrics. The company’s strong underwriting results are directly linked to the favorable conditions in Mexico’s real estate market.

Armour’s positive trend in operating performance continued in 2017, as the company recorded a combined ratio of 70.9% and a return on equity of 15.7%. Armour’s performance is in line with the title insurance industry, which globally is characterized by high operating expenses. Moreover, the company maintains an adequate reinsurance program placed entirely with a Lloyd’s syndicate.

Key rating drivers that could lead to negative rating actions include a sustained deterioration in operating performance resulting from adverse real estate market conditions or a significant decline in its risk-adjusted capitalization to levels no longer supportive of the current ratings. Key factors that could lead to positive rating actions for Armour include a considerable reduction in financial leverage and improvements in the capitalization level at its holding company.

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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20181102005595/en/

Olga Rubo

Associate Financial Analyst

+52 55 1102 2720, ext. 134

olga.rubo@ambest.com

or

Christopher Sharkey

Manager, Public Relations

+1 908-439-2200, ext. 5159

christopher.sharkey@ambest.com

or

Alfonso Novelo

Senior Director, Analytics

+52 55 1102 2720, ext. 107

alfonso.novelo@ambest.com

or

Jim Peavy

Director, Public Relations

+1 908-439-2200, ext. 5644

james.peavy@ambest.com

Source: A.M. Best