A.M. Best Assigns Ratings to Dentegra Seguros Dentales, S.A.

MEXICO CITY--(BUSINESS WIRE)-- A.M. Best has assigned a financial strength rating of A- (Excellent), an issuer credit rating (ICR) of “a-” and a Mexico National Scale Rating of “aa+.MX” to Dentegra Seguros Dentales, S.A. (DSD) (Mexico). The outlook assigned to all ratings is positive.

The ratings reflect DSD’s adequate risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), overall strong operating performance, conservative investment strategy and strong underwriting practices. The ratings also recognize DSD’s affiliation to its ultimate parent, Delta Dental of California (DDC) (San Francisco, CA), a leading dental insurer in the United States, which provides synergies and operating efficiencies to the Mexican subsidiary. DDC currently holds an FSR of A- (Excellent) and an ICR of “a-”. Offsetting these positive rating factors are the company’s relatively small size within Mexico’s insurance industry and its concentration in two products within accident and health insurance. The positive outlook for DSD’s ratings reflects the same outlook assigned to DDC based on improved risk-adjusted capitalization, an economic shift to a higher level of earnings and the execution of business strategies.

DSD initiated operations in Mexico in 2007, and as a result of the successful implementation of its strategy, it achieved its breakeven point within five years. The company underwrites dental insurance and is ranked as the market leader within this line of business as of June 2015. DSD operates through a network of independent agents, local brokers and other insurance companies as a complement of their medical expenses plans, and currently holds commercial relationships with more than 4,400 dentists in more than 260 cities in Mexico.

DSD’s historical risk-adjusted capitalization is adequate, as measured by BCAR. The Mexican subsidiary is mainly susceptible to underwriting risk as it retains 100% of its premiums; however, the company’s demonstrated strong underwriting practices have resulted in positive bottom line results in recent years that translate in solid and improving profitability metrics reflected in a 32.5% return on equity at the end of 2014. The company’s investment policies are conservative and in line with local and group guidelines and provide a steady flow of revenues to back its positive operating results. Moreover, the company benefits from being integrated into the group, gaining operational leverage through the same systems, procedures and enterprise risk management practices. The group has historically demonstrated its support to DSD in terms of capital injections in order to fund growth opportunities.

A.M. Best expects DSD to maintain adequate capitalization levels supported by good underwriting practices and reinvestment of earnings in the subsidiary. If there are positive rating actions taken on DDC, the global scale ratings on DSD will move in tandem and will trigger a positive rating action in the Mexico National Scale Rating. Likewise, if there are negative rating actions taken on DDC, the ratings on DSD will mirror the same adjustments. Additionally, key factors that could lead to negative rating actions include diminished parental support, as well as deteriorating operating performance that leads to substantial weakening of its risk-adjusted capitalization.

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
• Insurance Holding Company and Debt Ratings
• Rating Members of Insurance Groups
• 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: 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.

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

View source version on businesswire.com: http://www.businesswire.com/news/home/20151210006411/en/

A.M. Best
Salvador Smith, +(52) 55-1102-2720, ext. 109
Associate Financial Analyst
[email protected]
or
Christopher Sharkey, 908-439-2200, ext. 5159
Manager, Public Relations
[email protected]
or
Alfonso Novelo, +(52) 55-1102-2720, ext. 107
Director, Analytics
[email protected]
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
[email protected]

Source: A.M. Best

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