OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has upgraded the financial strength rating to A (Excellent) from A- (Excellent) and the issuer credit rating to “a” from “a-” of Mapfre Tepeyac, S.A. (Mapfre Tepeyac) (Mexico City, Mexico). The outlook for both ratings is stable.
The ratings reflect Mapfre Tepeyac’s solid capitalization, historical overall profitability and local market expertise. Mapfre Tepeyac operates as a composite insurer of life and non-life business and is one of the five largest non-life insurance companies in Mexico.
The ratings also recognize Mapfre Tepeyac's affiliation with its immediate parent, MAPFRE America, S.A., as well as the synergies and operating efficiencies the company enjoys as a group member of MAPFRE S.A., the leading insurer in Spain.
Offsetting these positive rating factors are the increasingly competitive Mexican insurance market Mapfre Tepeyac faces and pressure on its investment income as a result of the low interest rate environment.
Historically, the company's focus on expense management, along with significant levels of investment income, has resulted in favorable overall earnings. This has enabled Mapfre Tepeyac to continuously enhance its risk-adjusted capitalization. The Mexican insurance market remains extremely competitive, and the presence of large participants with access to the bancassurance channel will continue to pressure underwriting results, in addition to the persistent price war on the auto line of business. In addition, financial income will experience pressure as a result of the low interest rate environment.
A.M. Best considers the company to be well positioned for its current rating level. Factors that may lead to negative rating actions include a sharp decline in capitalization or changes in A.M. Best's view of the company's strategic importance to the parent. An upgrade in Mexico's Country Risk Tier (CRT) and positive rating actions on its parent company could result in a upward movement on Mapfre Tepeyac’s 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.
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