A.M. Best Affirms Ratings of Afianzadora Sofimex, S.A. and Assigns National Scale Rating

MEXICO CITY--(BUSINESS WIRE)-- A.M. Best has affirmed the financial strength rating of A- (Excellent), the issuer credit rating of “a-” of Afianzadora Sofimex, S.A. (Sofimex) (Mexico City, Mexico). The outlook for both ratings is stable. Additionally, A.M. Best has assigned a Mexico National Scale Rating of “aa+.MX” with a stable outlook to the company.

The ratings reflect Sofimex’s strong operating performance in terms of profitability and competitiveness within Mexico’s surety bond market, as well as strong risk-adjusted capitalization to support its activities. These positive rating factors are limited by A.M. Best’s view of the highly competitive market in which the company operates and the industry’s slowdown up to the third quarter of during 2015.

As of June 2015, Sofimex’s business portfolio was comprised of administrative sureties (88%), fidelity (6%), credit (4%) and judicial (2%).

Sofimex was able to maintain its profitable operations for 2014 while presenting strong growth above that of the dynamism of the industry during the year. A.M. Best believes the industry will end 2015 with marginal growth. Sofimex does not expect to match last year’s pace of growth but has been able to maintain its profitability levels through June 2015.

Sofimex continued to post adequate loss ratios at a similar level to that of last year. On the other hand, due to changes in its commission system, the company has been able to improve its combined ratio significantly and boost its profitability. Sofimex’s capitalization also remained strong and supportive of its rating even when stressed by possible losses from contingent claims. Furthermore, Sofimex has a solid reinsurance program with highly rated reinsurers.

While the surety markets did not live up to its expectations in 2015, the company has been able to maintain around the same level of business as in 2014, and is expected to present similar results. Furthermore, A.M. Best believes that as Mexico’s fourth largest surety writer and with its good distribution network and disciplined underwriting, Sofimex has sufficient resources to maintain a stable stream of net income to face the current market conditions.

Positive rating actions could occur if the company is able to maintain its current level of acquisition costs and improve its loss ratio, increasing profitability and as a consequence, further strengthen its capital base in support of financial strength. Negative rating actions could occur if underwriting performance deteriorates or if there is a significant increase in business risk or net premium risk.

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
• Evaluating Country Risk
• Rating Surety Companies
• Risk Management and the Rating Process for Insurance Companies

• Understanding Universal BCAR

View a general description of the policies and procedures used to determine credit ratings. Also in accordance with Mexican regulations, the following is a link to required disclosures – A.M. Best America Latina Supplementary Disclosure.

• Previous Rating Date: Dec. 05, 2014
• Date of Financial Data Used: June 30, 2015

This press release relates to rating(s) that have been published on A.M. Best's website. For additional 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 visit A.M. Best’s Ratings & Criteria Center.

A.M. Best’s credit ratings are independent and objective opinions, not statements of fact. A.M. Best is not an Investment Advisor, does not offer investment advice of any kind, nor does the company or its Ratings Analysts offer any form of structuring or financial advice. A.M. Best’s credit opinions are not recommendations to buy, sell or hold securities, or to make any other investment decisions. View our entire notice for complete details.

A.M. Best receives compensation for interactive rating services provided to organizations that it rates. A.M. Best may also receive compensation from rated entities for non-rating related services or products offered by A.M. Best. A.M. Best does not offer consulting or advisory services. For more information regarding A.M. Best’s rating process, including handling of confidential (non-public) information, independence, and avoidance of conflicts of interest, please read the A.M. Best Code of Conduct.

A.M. Best - Europe Rating Services Limited (AMBERS), a subsidiary of A.M. Best Company, is an External Credit Assessment Institutions (ECAI) in the European Union (EU). Therefore, credit ratings issued by AMBERS may be used for regulatory purposes in the EU as per Directive 2006/48/EC.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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A.M. Best Company

Elí Sánchez, +(52) 55-1102-2720, ext. 108

Financial Analyst

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Alfonso Novelo, +(52) 55-1102-2720, ext. 107

Director, Analytics

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Christopher Sharkey, (908) 439-2200, ext. 5159

Manager, Public Relations

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Jim Peavy, (908) 439-2200, ext. 5644

Assistant Vice President, Public Relations

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Source: A.M. Best Company, Inc.