MEXICO CITY--(BUSINESS WIRE)--A.M. Best has assigned a Financial Strength Rating of B++ (Good) and a Long-Term Issuer Credit Rating of “bbb+” to General de Salud Compañía de Seguros S.A. (Gsalud) (Mexico City, Mexico). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect Gsalud’s good risk-based capitalization, strong operating performance and supportive reinsurance program. Historically, Gsalud has been able to increase capital and achieve favorable results based on its consistent underwriting profit. Offsetting these positive rating factors are Gsalud’s concentration in one business line and the highly competitive health insurance market.
Gsalud is a fully owned subsidiary of General de Seguros, S.A.B. that is focused solely on health insurance. The company provides products mainly in the individual and collective health segments, as well as for major medical expenses. Since 2015, Gsalud has used the same distribution channels as General de Seguros, which involves agents, brokers and commercial offices. In the short term, Gsalud plans to develop distribution channels associated with financial institutions.
Based on Best’s Capital Adequacy Ratio (BCAR), Gsalud’s capitalization is good and supportive of the ratings. The subsidiary is mainly susceptible to underwriting risk as it retains almost 100% of its premiums. The company’s strong underwriting practices have resulted in positive technical performance with no dependence on investment revenue to achieve positive bottom line results during the past three years. This translated into solid and improved profitability that was reflected in a 15.5% return on equity in 2015. A.M. Best expects this trend to continue in 2016 and 2017.
The company’s investment policies are conservative, providing a steady flow of revenue to support its positive operating results. Moreover, the company benefits from being integrated into the Peña Verde, S.A.B. group, gaining operational leverage through common systems, procedures and enterprise risk management practices.
A.M. Best expects that the upward trend in underwriting results will further reinforce the company’s operating performance and thus capitalization levels. Factors that may trigger positive rating actions include a continued generation of underwriting earnings that strengthen risk-adjusted capitalization levels. The company’s current ratings could come under pressure should a lack of underwriting discipline result in overall profitability falling short of expectations or if capitalization is no longer 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:
- A.M. Best’s Ratings On a National Scale (Version Sept. 5, 2014)
- Analyzing Insurance Holding Company Liquidity (Version March 25, 2013)
- Evaluating Country Risk (Version May 2, 2012)
- Insurance Holding Company and Debt Ratings (Version May 6, 2014)
- Rating Members of Insurance Groups (Version Dec. 15, 2014)
- Risk Management and the Rating Process for Insurance Companies (Version April 2, 2013)
- Understanding Universal BCAR (Version April 28, 2016)
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 “Understanding Best’s Credit Ratings.”
- Previous Rating Date: Not rated
- Date of Financial Data Used: September 30, 2016
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