A.M. Best Assigns Credit Ratings to Berkley International Fianzas Mexico S.A.

MEXICO CITY--()--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 Fianzas Mexico S.A. (BFM) (Mexico City, Mexico). The outlook assigned to these Credit Ratings (ratings) is stable.

The ratings reflect BFM’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 BFM 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.

BFM is the Mexico surety subsidiary of W. R. Berkley, formed in November 2016; the company received regulatory approval for operations in June 2017 and issued its first policy that same month. The company plans to develop a regional presence in northwest Mexico, through a predominant mix of administrative surety and a lesser portion of credit and judicial products strongly backed up by a comprehensive reinsurance contract with its parent company.

BFM’s very strong balance sheet assessment is derived from its strong capital position in support of its premium growth during its first years of operation, which is further strengthened by the comprehensive reinsurance contract with its parent company. Furthermore, A.M. Best recognizes W.R. Berkley’s commitment to its subsidiaries providing additional capital fungibility to the Mexico operation.

The marginal assessment on operating performance is due to the start-up nature of the company and its lack of a track record. While the BFM 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.

As of June 2017, the surety market decreased 0.4% in real terms due to less public spending on infrastructure projects and an economic environment for investments that has remained slow. These conditions could continue amid possible economic volatility in 2018 during the country’s presidential campaigns and voting results, which could potentially limit the growth prospects of the company.

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’s financial performance impacts its capital or if premium volume is no longer supported by its risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR).

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)
  • Rating Surety Companies (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: December 31, 2017.

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 see A.M. Best’s Recent Rating Activity web page.

A.M. Best does not validate or certify the information provided by the client in order to issue a credit rating.

While the information obtained from the material source(s) is believed to be reliable, its accuracy is not guaranteed. A.M. Best does not audit the company’s financial records or statements, or otherwise independently verify the accuracy and reliability of the information; therefore, A.M. Best cannot attest as to the accuracy of the information provided.

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. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

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

Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Contacts

A.M. Best
Elí Sánchez, +52 55 1102 2720, ext. 108
Senior Financial Analyst
eli.sanchez@ambest.com
or
Alfonso Novelo, +52 55 1102 2720, ext. 107
Senior Director, Analytics
alfonso.novelo@ambest.com
or
Christopher Sharkey, +1 908 439 2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Jim Peavy, +1 908 439 2200, ext. 5644
Director, Public Relations
james.peavy@ambest.com

Contacts

A.M. Best
Elí Sánchez, +52 55 1102 2720, ext. 108
Senior Financial Analyst
eli.sanchez@ambest.com
or
Alfonso Novelo, +52 55 1102 2720, ext. 107
Senior Director, Analytics
alfonso.novelo@ambest.com
or
Christopher Sharkey, +1 908 439 2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Jim Peavy, +1 908 439 2200, ext. 5644
Director, Public Relations
james.peavy@ambest.com