MEXICO CITY--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A-(Excellent), the Long-Term Issuer Credit Rating of “a-” and the Mexico National Scale Rating of “aaa.MX” of Virginia Surety Seguros de México S.A. de C.V. (VSSM) (Mexico City, Mexico). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect VSSM’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
The ratings also reflect the company’s balance sheet strength assessed at a strong level since it began operations in Mexico. The ratings of VSSM also factor its recent affiliation and strategic importance to Assurant, Inc., the ultimate parent, as well as its risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Partially offsetting these positive rating factors is the company’s small market share, coupled with its startup nature.
VSSM is a subsidiary of Virginia Surety Company, Inc., a general underwriting entity part of The Warranty Group, Inc. In 2017, The Warranty Group, Inc. completed a merger agreement with Assurant Inc., with the purpose of combining insurance operations in various jurisdictions, including the operation in Mexico. VSSM started operations in Mexico in January 2017, underwriting premiums in the property/casualty segment, focused in the auto insurance line of business and other miscellaneous lines of business.
VSSM underwrites specialty products, providing coverage for risks that usually are not underwritten in the traditional automobile insurance. In its miscellaneous lines of business, VSSM mainly offers coverage in case of theft or accidental damage for consumer technology products, such as cell phones, photographic and sound equipment and home appliances. VSSM places its products through its network of business partners, which include manufacturers, distributors and retailers.
VSSM operates under the same management as Assurant Daños México, S.A. and Assurant Vida México, S.A, subsidiaries of Assurant Inc. These companies operate separately but they do not compete against each other; moreover, VSSM takes advantage of the operational synergies derived from being part of the Assurant Group. In 2019, for the first time in its three years of operations, VSSM achieved positive bottom-line results, backed by investment results. As of November 2020, VSSM has been able to maintain profitability, still underpinned by investment income.
Factors that could lead to positive rating actions for VSSM include consistent improvements in operating performance, while maintaining risk-adjusted capitalization metrics at the strongest level. Conversely, negative rating actions could take place if operating performance substantially deteriorates or if an aggressive growth in premium leads to a drop in risk-adjusted capitalization to a level no longer supportive of the current ratings.
Negative rating actions also would occur if VSSM’s parental support or its strategic importance to the group deteriorates in AM Best’s view.
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