MEXICO CITY--(BUSINESS WIRE)--AM Best has upgraded the Financial Strength Rating to A- (Excellent) from B++ (Good), the Long-Term Issuer Credit Rating to “a-” (Excellent) from “bbb+” (Good) and the Mexico National Scale Rating (NSR) to “aaa.MX” (Exceptional) from “aa+.MX” (Superior) of Grupo Mexicano de Seguros, S.A. de C.V. (GMX) (Mexico). The outlooks of these Credit Ratings (ratings) has been revised to stable from positive.
The ratings reflect GMX’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
The stable outlooks reflect AM Best’s expectation that the company will be able to maintain its strong level of operating performance and a very strong balance sheet strength assessment, characterized by premium sufficiency and a prudent capital management.
The ratings upgrade was driven by GMX’s operating performance, which has been characterized by premium sufficiency by a large margin, for over six years. Profitability has been achieved consistently through the company’s underwriting results and further enhanced by investment income, which has improved in recent years, as GMX’s achieves greater sophistication of its asset management and operations.
GMX is a subsidiary of GMS Valore, S.A. de C.V., which provides its subsidiary with synergies and operating efficiencies as a member of this group. The company initiated operations in Mexico City in 1998. GMX is the second largest insurer in Mexico’s property/casualty segment (excluding auto), with a 10% market share as of March 2023, based on direct premiums written. The company’s chief business line is general and professional liability, and it operates mainly through a network of independent agents and promoters, as well as online sales.
GMX has strengthened its capital base consistently as a result of positive bottom-line results over the years, as well as an increasing catastrophe reserve, which have provided the company with the capacity to withstand a significant rise in claims. GMX’s risk-adjusted capitalization stands at the strongest level, according to Best’s Capital Adequacy Ratio (BCAR). The company’s balance sheet is further protected by a thorough reinsurance structure placed with participants with an excellent level of security.
The company has been able to grow continuously during the past seven years, by taking advantage of its digital channel and technology capabilities. GMX’s management team has a solid track record of implementing strategies and taking advantage of opportunities for innovation in Mexico’s insurance market given the increased competition.
Positive rating actions could occur if the company is able to maintain its risk-adjusted capitalization at the strongest level, further strengthening its capital base through profitable results. Factors that may lead to negative rating actions include a continued deterioration of underwriting results to a level that no longer supports the strong operating assessment and ultimately causes an erosion of the company's capital base, weakening its balance sheet strength.
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