AM Best has affirmed the Financial Strength Rating of A (Excellent), the Long-Term Issuer Credit Rating of “a+” (Excellent), and the Mexico National Scale Rating of “aaa.MX” (Exceptional) of MAPFRE México, S.A. (MM) (Mexico City, Mexico). The outlook of these Credit Ratings (ratings) is stable.
MM is a member of the MAPFRE S.A., which on a consolidated basis has a balance sheet strength that AM Best assesses as very strong, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management (ERM).
MM’s ratings also reflect its strategic importance to and alignment with MAPFRE Internacional S.A., as well as the synergies and operating efficiencies derived from being a group member of MAPFRE S.A., the leading insurer in Spain.
MM’s ratings are derived from its solid risk-adjusted capitalization and underwriting strategy, as well as its competitive position in Mexico’s insurance industry and appropriate ERM practices. Partially offsetting these positive rating factors are uncertain prospective opportunities for growth in Mexico’s unwinding economy that has been slowing since 2018.
MM operates as a composite insurer of life and non-life business and ranks among the top 10 largest insurers in Mexico, based on written premium.
MM’s written premium has presented stable growth after adjusting for the biannual property-liabilities policy of Petróleos Mexicanos (PEMEX), a state-owned oil and gas company that MM started underwriting in 2015 and renewed in 2019 and 2021 for USD 502 million and USD 550 million of premium, respectively.
Technical income in 2020 reflects continued adjustments in claims controls and pricing done within its main segments, in conjunction with contained acquisition expenses, and the pandemic positively impacting property/casualty lines. Financial income continued to influence the net result positively, which for 2020 was MXN 497 million (USD 25 million). The company showed improvement in its operating performance at year-end 2020, posting a combined ratio below 100%.
The very strong assessment for MM’s balance sheet strength, as measured on a consolidated basis, remains slightly dependent upon dividend payments to its holding company. In the medium term, AM Best expects continued fine-tuning in underwriting strategy to enhance net results, and therefore, the continued expansion of its capital base.
ERM practices are well-established and implemented throughout the company and closely follow those set by MAPFRE S.A. This integration has benefited the company’s implementation of Mexico’s Solvency II-type regulations.
If there are negative rating actions on the MAPFRE group, as a result of a sustained decline in operating performance below AM Best’s expectation for the strong assessment level, or a sustained deterioration in MAPFRE S.A.’s consolidated risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), the ratings of MM would mirror those same actions.
A change in AM Best’s perception regarding the actual or perceived level of MM’s strategic importance to the MAPFRE group also could impact the company’s ratings.
This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
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