A.M. Best Assigns Ratings to Armour Secure Insurance S.A. de C.V.

MEXICO CITY--(BUSINESS WIRE)-- A.M. Best has assigned a financial strength rating of B (Fair), an issuer credit rating (ICR) of “bb” and a Mexico National Scale Rating of “bbb-.MX” to Armour Secure Insurance S.A. de C.V. (Armour) (Mexico). The outlook assigned to each rating is stable.

Armour’s ratings reflect the company’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 of its holding company, Armour Group Holdings Limited, based on BCAR, which could pressure Armour’s financial flexibility. Also, despite being a market leader in its niche of title insurance, the company’s small market share in Mexico’s insurance industry and concentration in a single line of business mitigate this strength.

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

According to BCAR, Armour had a strong risk-adjusted capital position for year-end 2015, which is supported by positive bottom line results reflected in good and improving profitability metrics. The company’s strong underwriting results are directly linked to the favorable conditions in Mexico’s real estate market. In 2015, Armour’s operating performance was characterized by a combined ratio of 94% and a return on equity of 15.9%. Armour’s performance is in line with the title insurance industry, which is globally 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 positive rating actions for Armour include a considerable reduction in the financial leverage and improvements in the capitalization of its holding company. Key factors 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.

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
• Analyzing Insurance Holding Company Liquidity
• BCAR for Title Insurance Companies
• Evaluating Country Risk
• Insurance Holding Company and Debt Ratings
• Rating Members of Insurance Groups
• Rating Title Insurance 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: Not rated
• Date of Financial Data Used: Dec 31, 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 see A.M. Best’s Recent Rating Activity web page.

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.

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A.M. Best

Salvador Smith, +52 55 1102 2720, ext. 109

Associate Financial Analyst

[email protected]

or

Alfonso Novelo, +52 55 1102 2720, ext. 107

Director, Analytics

[email protected]

or

Christopher Sharkey, +1-908-439-2200, ext. 5159

Manager, Public Relations

[email protected]

or

Jim Peavy, +1-908-439-2200, ext. 5644

Assistant Vice President, Public Relations

[email protected]

Source: A.M. Best