A.M. Best Affirms Ratings of Grupo Mexicano de Seguros S.A. de C.V.; Assigns Mexico National Scale Rating

MEXICO CITY--(BUSINESS WIRE)-- A.M. Best has affirmed the financial strength rating of B++ (Good) and the issuer credit rating of “bbb” of Grupo Mexicano de Seguros S.A. de C.V. (GMX) (Mexico). The outlook for both ratings is stable. Additionally, A.M. Best has assigned a Mexico National Scale Rating of “a.MX” with a stable outlook to the company.

The ratings reflect GMX’s well-planned business strategy, adequate reinsurance program placed among counterparties with a strong level of security and an adequate level of risk-adjusted capitalization. The ratings also recognize GMX’s affiliation with its immediate parent, Grupo Maxasem, S.A. de C.V., which includes the synergies and operating efficiencies the company enjoys as a member of this group.

GMX’s management team has a solid track record in terms of implementing strategy, as well as taking advantage of opportunities for innovation in Mexico’s insurance market given the increased competition. Combined with a good reinsurance program, GMX’s strategy takes into account the changing regulatory environment.

Offsetting these positive rating factors are the volatility in GMX’s profitability levels derived from its portfolio characteristics, a changing operational environment inside and outside of the company and the uncertainty related to the exploration of new niche segments. While capitalization, according to Best’s Capital Adequacy Ratio (BCAR), remains supportive of GMX’s current ratings, marginal and volatile coverage of the regulatory capital requirement remains a concern and could pressure the ratings in the event of lack of compliance.

While A.M. Best expects GMX’s prospective BCAR to be supportive for the current rating levels, in the next few years, it will continue to be pressured as a result of the company’s growth targets, recent and expected non-recurring expenses derived from the implementation of new internal systems and expenses related to the adoption of the new regulatory framework. If GMX is able to successfully implement its strategy and benefits from the operating requirements under the new Solvency II-type regulation, pressures on GMX’s BCAR will diminish in the midterm.

A.M. Best considers GMX to be well-positioned for its current rating level. Factors that may lead to rating enhancement include sustained improvement in the company’s underwriting performance and material enhancements in its capitalization.

Factors that may lead to negative rating actions include continued deterioration of underwriting results, a decline in balance sheet strength, according to BCAR, or a substantial and sustained lack of coverage for regulatory capital requirements.

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
• Catastrophe Analysis in A.M. Best Ratings
• Evaluating Country Risk
• Insurance Holding Company and Debt Ratings

• 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.

I. Previous Rating Date: Sept. 5, 2014

II. 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, Inc.

Salvador Smith, +(52) 55-1102-2720, ext. 109

Associate 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.