AM Best Affirms Credit Ratings of Grupo Financiero Aserta, S.A. de C.V. and Its Main Subsidiaries

BY Business Wire | CORPORATE | 12/16/21 02:00 PM EST

MEXICO CITY--(BUSINESS WIRE)-- AM Best has affirmed the Mexico National Scale Rating (NSR) of ?aa-.MX? (Superior) and the Long-Term Issuer Credit Rating (Long-Term ICR) of ?bbb-? (Good) of Grupo Financiero Aserta, S.A. de C.V. (GFA). Concurrently, AM Best has affirmed the NSR of ?aaa.MX? (Exceptional), the Financial Strength Rating of A- (Excellent) and the Long-Term ICR of ?a-? (Excellent) of Aseguradora Insurgentes, S.A. de C.V. (AISA), and its sister company, Aseguradora Aserta, S.A. de C.V. (Aserta), which are the main subsidiaries of GFA. The outlook of these Credit Ratings (ratings) is stable. All companies are domiciled in Mexico City, Mexico.

The ratings reflect AISA and Aserta?s consolidated balance sheet strength, which AM Best assesses as very strong, as well as their strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).

In January 2017, AISA and Aserta were authorized to operate as insurances entities under a seguro de cauci?n (surety insurance) license, and changed their names from Afianzadora Insurgentes, S.A. de C.V. and Afianzadora Aserta, S.A. de C.V., respectively. In July 2018, the companies received approval to underwrite as surety insurers; the three allowed lines approved for this license are surety, surety insurance and credit insurance. As of December 2020, most of the business volume corresponding to surety insurance was issued primarily in the Spain branch office of Aserta.

The ratings also reflect the group?s leading position in Mexico?s surety market, historically good consolidated operating performance throughout the market cycle and its seasoned management team. In addition, the ratings recognize the companies? affiliation as larger members of GFA.

The group?s positive rating factors are driven by its surety insurance companies? solid surplus positions and sound underwriting practices, in conjunction with reinsurance programs placed among highly rated reinsurance counterparties. AISA and Aserta have maintained positive bottom-line results despite the slow development of Mexico?s surety industry during the past few years and into 2021. In addition, the geographical expansion through the branch in Spain has been an important driver of profitability and growth.

As of June 2021, Mexico?s surety market is showing signs of recovery, although maintaining an adequate volume of business will be challenging given that the performance of the surety sector is linked to economic cycles, and this segment has remained stagnant in recent years. The companies continue to report positive bottom-line results, and adequate profitability metrics in comparison with other companies in Mexico?s surety market. At the same time, GFA has taken measures to face any potential adverse market conditions, and has worked to diversify its revenue further by increasing its international presence and strengthening its corporate strategy to take advantage of the new surety insurance opportunities. AM Best expects AISA and Aserta to maintain their strong market share and meet expansion targets while maintaining supportive risk-adjusted capitalization levels.

GFA is well-protected by its reinsurance program and its contingency reserves. Its appropriate ERM framework has allowed the company to manage its exposures effectively and make efficient use of its capital to improve its solvency.

Positive rating actions are not expected in the medium term. Factors that could lead to negative rating actions are shortfalls in the company?s projected performance in terms of profitability and capital generation. Furthermore, negative rating actions also could result from adverse scenarios in the surety market that translate into material deterioration of the company?s risk-adjusted capitalization to levels that AM Best considers nonsupportive of the current 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.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright ? 2021 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Source: AM Best

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