MEXICO CITY--(BUSINESS WIRE)--A.M. Best has assigned a financial strength rating of C++ (Marginal), an issuer credit rating (ICR) of “b+” and a Mexico National Scale Rating of “bb.MX” to ANA Compañía de Seguros S.A. de C.V. (ANA) (Mexico). The outlook assigned to all ratings is stable.
The ratings on ANA reflect its weak risk-adjusted capitalization as measured by Best’s Capital Adequacy Ratio (BCAR), deteriorating operating performance, the company’s dependence on financial income in order to counterweight negative underwriting results and its relatively small size within the industry’s highly competitive environment. Offsetting these negative rating factors is the company’s affiliation with its immediate parent, Grupo Maxasem, S.A. de C.V. (Grupo Maxasem), which includes the synergies and operating efficiencies that ANA enjoys as a member of this group.
ANA was established in Mexico in 1995 and acquired by Grupo Maxasem in 2002. The company exclusively underwrites auto insurance and ranked 14th in Mexico’s auto segment as of June 2015 with a 1.2% market share based on written premiums. ANA operates through a network of local agents, auto dealers and service offices throughout Mexico.
ANA’s capitalization is weak, as measured by Best’s Capital Adequacy Ratio (BCAR), with underwriting risk standing as the main component affecting required capital. In addition, the company’s coverage of the regulatory solvency requirement is marginal and could experience pressure derived from growth or poor performance of its operation. On the other hand, the company has historically benefited from the support of Grupo Maxasem in terms of capital injections and synergies with other group members.
ANA’s profitability has been pressured over the past years, given the highly competitive environment in its niche and lower financial products derived from the global low interest rate environment. The company registered premiums deficiency for 2014 and the first half of 2015, generating combined ratios of 107% and 117%, respectively. Furthermore, low investment income has not been enough to generate positive bottom line results. The company has made adjustments to its underwriting practices, which in A.M. Best’s opinion will allow ANA to improve its operating performance in the medium term.
Key rating drivers that could lead to positive rating actions include improving operating performance that results in premiums sufficiency and positive net income which strengthens the company’s capital position. Key factors that could lead to negative rating actions include a continued deteriorating operating performance that weakens the company’s capital position.
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
- Catastrophe Analysis in A.M. Best Ratings
- Evaluating Country Risk
- Insurance Holding Company and Debt Ratings
- Risk Management and the Rating Process for Insurance Companies
- Understanding Universal BCAR
View 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: Not rated
- Date of Financial Data Used: September 30, 2015
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