Best’s News & Research Service - December 19, 2022 02:38 PM (EST)
AM Best Downgrades Credit Ratings of Insignia Life S.A. de C.V. and Places Ratings Under Review With Negative Implications
- December 19, 2022 02:38 PM (EST)
Mexico City //BestWire// - AM Best has downgraded the Financial Strength Rating to B (Fair) from B+ (Good), the Long-Term Issuer Credit Rating to “bb” (Fair) from “bbb-” (Good) and the Mexico National Scale Rating to “a.MX” (Excellent) from “aa-.MX” (Superior) of Insignia Life S.A. de C.V. (Insignia) (Mexico). Concurrently, AM Best has placed these Credit Ratings (ratings) under review with negative implications. These rating actions follow the sustained deterioration of the financial strength of its parent, Proyecto Insignia, S.A.P.I. de C.V.(PIN), and its potential effects on Insignia’s balance sheet strength.
The ratings reflect Insignia’s balance sheet strength, which AM Best assesses as strong as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
Insignia’s operating results have been impacted heavily by COVID-19-related claims during the past two years, on which significant losses reported in the operating entity have in turn translated into a severe weakening of PIN’s capital base, further deteriorating its already elevated financial leverage. The under review with negative implications status points to the impact that the high financial leverage at the holding company level could have on Insignia’s balance sheet strength, as the sole source of revenue of its parent company. In addition, the ongoing losses in net results could potentially result in a sharp decrease in risk-adjusted capitalization. AM Best will continue to monitor this situation as it evolves.
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:
- AM Best’s Ratings On a National Scale (Version Oct. 13, 2017)
- Available Capital and Holding Company Analysis (Version Oct. 13, 2017)
- Evaluating Country Risk (Version Oct. 13, 2017)
- Understanding Global BCAR (Version June 30, 2022)
- 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: March 4, 2022
- Date Range of Financial Data Used: Dec. 31, 2016-Sept. 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.
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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.