AM Best Affirms Credit Ratings of Berkley International Fianzas Mexico S.A.

BY Business Wire | CORPORATE | 06/08/22 03:07 PM EDT

MEXICO CITY--(BUSINESS WIRE)-- AM Best has affirmed the Financial Strength Rating of A+ (Superior), the Long-Term Issuer Credit Rating of ?aa-? (Superior) and the Mexico National Scale Rating of ?aaa.MX? (Exceptional) of Berkley International Fianzas Mexico S.A. (BFM) (Mexico City, Mexico). The outlook of these Credit Ratings (ratings) is stable.

BFM is a member of W. R. Berkley Insurance Group (Berkley Group), which on a consolidated basis, has a balance sheet strength that AM Best assesses as strongest, as well as strong operating performance, a favorable business profile and appropriate enterprise risk management (ERM).

The ratings reflect BFM?s substantial reinsurance support from its group through the Berkley Insurance Company. Additionally, the ratings factor in BFM?s integration with its parent company, W. R. Berkley Corporation (W. R. Berkley), in terms of underwriting, ERM and capital commitments. Limiting the ratings is the inherent risk of a startup company implementing its business plan amid the challenges derived from the weakening of Mexico?s economy.

BFM was formed in November 2016, and is the Mexico surety subsidiary of W. R. Berkley. The company received regulatory approval for operations in June 2017 and issued its first policy that same month. The company plans to develop a regional presence in northwest Mexico, through a predominant mix of administrative surety and a lesser portion of credit and judicial products strongly backed by a comprehensive reinsurance contract with its parent company.

BFM?s solid risk-adjusted capitalization is derived from its strong capital position in support of its premium growth during its first years of operation, which is strengthened further by the comprehensive reinsurance contract with its parent company. Furthermore, AM Best recognizes W. R. Berkley?s commitment to its subsidiaries providing additional capital fungibility to the Mexico operation.

BFM has been able to grow it business volume during the past five years. Despite several challenges that the Mexico?s surety segment faces due to the economic slowdown that lingers since the beginning of the COVID-19 pandemic, BFM has been able to implement its growth strategy, surpassing during 2021 its 2020 premium growth by focusing on private sector business. BFM?s experienced team of underwriters expect their underwriting capabilities to continue providing resources for the company to keep developing its business base.

If negative rating actions are taken on the main operating subsidiaries of the Berkley Group for a significant drop in equity, preventing the organization from maintaining the expected risk-adjusted capitalization levels, BFM?s ratings likely would move in tandem. Negative rating actions also could occur to the insurance operations as a result of a sustained deterioration in BFM?s underwriting or operating results, driven by either current accident year results or adverse development of loss reserves from prior years. If the financial position of the ultimate parent weakens, requiring the withdrawal of capital from the group?s various insurance companies or increases financial leverage or leads to a decline in interest coverage at the holding company that is not supportive of the current ratings level, negative rating actions could be taken on the Berkley Group, and BFM?s ratings would reflect those actions.

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 Performance Assessments, 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 ? 2022 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Source: AM Best

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