A.M. Best Affirms Ratings of General de Seguros S.A.B.

MEXICO CITY--(BUSINESS WIRE)-- A.M. Best has affirmed the financial strength rating (FSR) of B++ (Good) and the issuer credit rating (ICR) of “bbb+” of General de Seguros, S.A.B. (Genseg) (Mexico City, Mexico). The outlook for both ratings is stable.

The ratings reflect Genseg’s strong risk-based capitalization and profitable operation. Historically, Genseg has been able to increase capital and achieve favorable results given its consistent inflow of investment income, good underwriting practices and experienced management team. Moreover the company’s financial strength is enhanced by its solid reinsurance program and asset liability management practices.

Based on Best’s Capital Adequacy Ratio (BCAR), Genseg’s capitalization is strong and supportive of the ratings. The company has consistently grown capital and surplus at a compound annual growth rate of 4.5% over the past five years. The company’s strong capitalization and liquidity have provided Genseg with flexibility in order to cover deviations in claims or volatile securities market conditions without having to realize losses in its investment portfolio. In 2014, Genseg’s profitability was supported mainly by investment income and underwriting earnings mainly coming from its property & casualty, motor and health books of business. The company’s strong underwriting practices are reflected in combined ratios mostly below 100%.

Partially offsetting these positive rating factors is the volatility in Genseg’s results, mainly arising from its exposure to catastrophic risks from its agricultural line of business, and the impact on profitability derived from its strong expansion into life products. Genseg’s business concentration in Mexico makes it vulnerable to regulatory, economic and political influences and volatility; the company mitigates that risk as a multiline insurer. Moreover, Genseg is challenged to grow in a very competitive and maturing market while generating consistent earnings and increasing its market share.

Factors that may trigger positive rating actions include less volatile profitability metrics performing in line with higher rated peers and good performance in the middle term on its life book of business, which was one of the main drivers behind the strong growth shown by the company in 2014. The company’s current ratings could come under pressure should soft market conditions continue and a lack of underwriting discipline results in its underwriting and overall profitability falling short of expectations or if capitalization is 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:

• 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.

• Previous Rating Date: June 23, 2014
• Date of Financial Data Used: March 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 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.

Copyright © 2015 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

View source version on businesswire.com: http://www.businesswire.com/news/home/20150717005798/en/

A.M. Best Company, Inc.
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, 908-439-2200, ext. 5159
Manager, Public Relations
[email protected]
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
[email protected]

Source: A.M. Best Company, Inc.

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