A.M. Best Affirms Ratings of Afianzadora Sofimex, S.A.

MEXICO CITY--()--A.M. Best has affirmed the financial strength rating of A- (Excellent) and the issuer credit rating of “a-” of Afianzadora Sofimex, S.A. (Sofimex) (Mexico City, Mexico). The outlook for both ratings is stable.

The ratings are based on the solid performance of Sofimex in terms of profitability, balance sheet strength, good competitive position within the contract and surety bond market in Mexico and positive expectations for premium growth.

These positive rating factors are limited by A.M. Best’s view of the highly competitive market in which the company operates, the increase in claims present during 2013 and the uncertainty regarding price competition as the surety market expands in 2015 based on A.M. Best’s expectation of increased public expenditures.

As a result of higher claims, net income during 2013 saw a reduction in comparison with 2012. This should not be a forward-looking concern as management efforts are directed toward claim control and collections. Sofimex’s capitalization also remained strong, even with higher than previous years’ dividend payments and no significant drags. Furthermore, Sofimex has a solid reinsurance program with highly rated reinsurers.

While the surety markets are expected to expand during 2015, this positive trend might be mitigated by soft market conditions derived from a very competitive environment. Nevertheless, A.M. Best believes that Sofimex, being the fourth largest surety writer in Mexico and with a good distribution network, has sufficient resources to maintain its current performance.

Positive rating actions could occur if the company is able to expand its retention capacity while consistently improving its profitability indicators and maintaining the strength of its capital base. Negative rating actions could occur if underwriting performance deteriorates and capitalization as measured by Best’s Capital Adequacy Ratio falls to levels not supportive of the current ratings.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. 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
  • Rating Surety Companies
  • Risk Management and the Rating Process for Insurance Companies
  • Understanding Universal BCAR

Click here for a general description of the policies and procedures used to determine credit ratings. Also in accordance with Mexican regulations, the following is a link to required disclosures – A.M. Best America Latina Supplementary Disclosure.

  • Previous Rating Date: Oct. 11, 2013
  • Date of Financial Data Used: Sept. 30, 2014

This press release relates to rating(s) that have been published on A.M. 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 visit A.M. Best’s Ratings & Criteria Center.

A.M. Best’s credit ratings are independent and objective opinions, not statements of fact. A.M. 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. A.M. 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.

A.M. Best receives compensation for interactive rating services provided to organizations that it rates. A.M. Best may also receive compensation from rated entities for non-rating related services or products offered by A.M. Best. A.M. Best does not offer consulting or advisory services. For more information regarding A.M. Best’s rating process, including handling of confidential (non-public) information, independence, and avoidance of conflicts of interest, please read the A.M. Best Code of Conduct.

A.M. Best - Europe Rating Services Limited (AMBERS), a subsidiary of A.M. Best Company, is an External Credit Assessment Institutions (ECAI) in the European Union (EU). Therefore, credit ratings issued by AMBERS may be used for regulatory purposes in the EU as per Directive 2006/48/EC.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

Contacts

A.M. Best Co.
Elí Sánchez
Financial Analyst
+(52) 55-1102-2720, ext. 108

eli.sanchez@ambest.com
or
Alfonso Novelo
Director, Analytics
+(52) 55-1102-2720, ext. 107

alfonso.novelo@ambest.com
or
Christopher Sharkey
Manager, Public Relations
(908) 439-2200, ext. 5159

christopher.sharkey@ambest.com
or
Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644

james.peavy@ambest.com

Contacts

A.M. Best Co.
Elí Sánchez
Financial Analyst
+(52) 55-1102-2720, ext. 108

eli.sanchez@ambest.com
or
Alfonso Novelo
Director, Analytics
+(52) 55-1102-2720, ext. 107

alfonso.novelo@ambest.com
or
Christopher Sharkey
Manager, Public Relations
(908) 439-2200, ext. 5159

christopher.sharkey@ambest.com
or
Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644

james.peavy@ambest.com