Best’s News & Research Service - October 27, 2022 01:32 PM (EDT)
AM Best Affirms Credit Ratings of Seguros Inbursa, S.A. Grupo Financiero Inbursa
- October 27, 2022 01:32 PM (EDT)
Mexico City //BestWire// - AM Best has affirmed the Financial Strength Rating of A (Excellent), the Long-Term Issuer Credit Rating of “a+” (Excellent) and the Mexico National Scale Rating (NSR) of “aaa.MX” (Exceptional) of Seguros Inbursa, S.A. Grupo Financiero Inbursa (Seguros Inbursa) (Mexico). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Seguros Inbursa’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
Seguros Inbursa’s balance sheet strength is underpinned by its risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The ratings also reflect its strong operating performance, driven by consistent profitability, mainly supported by a stable flow of investment income, as well as low underwriting leverage, a diversified business profile and the company’s affiliation with Grupo Financiero Inbursa, S.A.B. de C.V. (Grupo Financiero Inbursa), one of the largest financial groups in Mexico.
Seguros Inbursa underwrites life and non-life business and remains one of the largest domestic insurance companies in Mexico. In 2021, individual life, which represented 14.9% of total gross premium written, was the company’s most profitable line of business. The company has shown disciplined underwriting in a highly competitive market, consistently reporting sufficient premium levels that compare positively with its closest competitors. This discipline also is reflected in its stable combined ratio, which has remained in line with historical trends, close to breakeven, with no material volatility in its components. In addition, investment results continue to be an important source of profitability for the company.
As of June 2022, the company posted MXN 1.9 billion in net income, showing resilience against current market conditions with no significant deviations from past operating performance metrics. The improvement in profitability reflects the efficiencies achieved in the operating expenses, as well as Seguros Inbursa’s efforts to contain the loss ratio.
Historically, Seguros Inbursa has operated with low underwriting leverage. The company’s risk-adjusted capitalization remains supportive of its current ratings. Adjusted capital has grown at a compound annual growth rate of 5.9% during the past five years, and AM Best expects this trend to continue as a result of sound underwriting, conservative reserving and prudent dividend and investment policies, as well as an effective cost containment strategy. Furthermore, Seguros Inbursa continues to benefit from significant operating efficiencies afforded by Grupo Financiero Inbursa’s vast financial and system networks.
Partially offsetting these positive rating factors is the strong competition in Mexico’s insurance market, which AM Best believes could pressure the company’s profitability and market share, as well as the challenging state of the economy and volatile capital markets.
Key rating drivers that could lead to negative rating actions include sustained deterioration in operating results, or a significant weakening of its risk-adjusted capitalization, as measured by BCAR. Positive rating movements are unlikely in the near term.
The methodology used in determining these ratings is Best’s Credit Rating Methodology (Version Nov. 13, 2020), which provides a comprehensive explanation of AM 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:
- Evaluating Country Risk (Version Oct. 13, 2017)
- Understanding Global BCAR (Version June 30, 2022)
- Catastrophe Analysis in A.M. Best Ratings (Version Oct. 13, 2017)
- Available Capital & Holding Company Analysis (Version Oct. 13, 2017)
- A.M. Best’s Ratings On a National Scale (Version Oct. 13, 2017)
- Scoring and Assessing Innovation (Version March 5, 2020)
View a general description of the policies and procedures used to determine credit ratings. For information on the meaning of ratings, structure, voting and the committee process for determining the ratings and monitoring activities, please refer to Guide to Best’s Credit Ratings.
- Previous Rating Date: November 5, 2021
- Date Range of Financial Data Used: Dec. 31, 2015-June 30, 2022
This press release relates to rating(s) that have been published on AM 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 see AM Best’s Recent Rating Activity web page.
AM Best does not validate or certify the information provided by the client in order to issue a credit rating.
While the information obtained from the material source(s) is believed to be reliable, its accuracy is not guaranteed. AM Best does not audit the company’s financial records or statements, or otherwise independently verify the accuracy and reliability of the information; therefore, AM Best cannot attest as to the accuracy of the information provided.
AM Best’s credit ratings are independent and objective opinions, not statements of fact. AM 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. AM 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.
AM Best receives compensation for interactive rating services provided to organizations that it rates. AM Best may also receive compensation from rated entities for non-rating related services or products offered by AM Best. AM Best does not offer consulting or advisory services. For more information regarding AM Best’s rating process, including handling of confidential (non-public) information, independence, and avoidance of conflicts of interest, please read the AM Best Code of Conduct. 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.