MEXICO CITY--(BUSINESS WIRE)--A.M. Best has assigned a Financial Strength Rating of A+ (Superior), a Long-Term Issuer Credit Rating of “aa-” and a Mexico National Scale Rating of “aaa.MX” to Berkley International Seguros Mexico S.A. (BSM) (Mexico City, Mexico). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect BSM’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management (ERM). The ratings of BSM also reflect its affiliation with its parent company, W. R. Berkley Corporation (W. R. Berkley), in terms of underwriting, reinsurance protection, ERM and capital commitments. Limiting the ratings is the inherent risk of a startup company implementing its business plan and the potential volatility of Mexico’s economy during 2018.
BSM is the Mexico subsidiary of W. R. Berkley, formed in November 2016; the company received regulatory approval for operations in June 2017 and issued its first premium in July of that same year. The company offers a diversified slate of property/casualty products strongly backed up by treaty and facultative reinsurance contracts with its parent company.
BSM very strong balance sheet assessment is derived from its strong capital position, in support of its premium growth during its first years of operation. This is further strengthened by the 95%/5% quota share and excess of loss contracts provided by its parent. Furthermore, A.M. Best recognizes W. R. Berkley’s commitment to its subsidiaries through additional capital fungibility to the Mexico operation.
The marginal assessment on operating performance is due to the startup nature of the company and its lack of a track record. While BSM’s management and underwriting team have a successful track record of their own, the business plan implementation has to evolve for A.M. Best to adequately evaluate the company’s operating performance.
While the Mexico property/casualty business experienced healthy growth during the first half of 2017, hurdles may arise due to potential economic volatility in 2018 during the country’s presidential campaigns and voting results, which could hamper the company’s growth prospects.
Positive rating actions could mirror those of its group if the subsidiary is able to achieve its commercial goals while posting sound operating performance and maintaining its very strong balance sheet assessment. Negative rating actions could take place if the company fails to meet its financial performance goals in a manner that impacts its risk-adjusted capitalization to a point where it is no longer supportive of the 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 (Version Oct. 13, 2017)
- Understanding Universal BCAR (Version Oct. 13, 2017)
- Available Capital & Holding Company Analysis (Version Oct. 13, 2017)
- Rating New Company Formations (Version Oct. 13, 2017)
- A.M. Best Ratings on a National Scale (Version Oct. 13, 2017)
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: Dec. 31, 2017.
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