MEXICO CITY--(BUSINESS WIRE)--AM Best has affirmed the Mexico National Scale Rating of “aa+.MX”, the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb+” of Aserta Seguros Vida, S.A. de C.V., Grupo Financiero Aserta (ASV) (Mexico City, Mexico). The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect ASV’s balance sheet strength, which A.M. Best categorizes as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The ratings reflect ASV’s integration into Grupo Financiero Aserta, S.A. de C.V. (GFA) in terms of operations, capital support, business infrastructure and ERM. Mitigating these positive factors are the start-up nature of the company and the volatility in the bottom line results inherent in a recently created life insurer.
ASV started operations in 2012, focusing on life microinsurance, group life and accident & health. In 2013, GFA acquired a majority stake of the company and was granted regulatory approval to be a member of the financial group. As of September 2018, group life business comprised 99.56% of the ASV’s business portfolio with accident & health accounting for 0.43%, and individual life for the remaining 0.02%. ASV ranked as the 25th largest insurer in Mexico’s life segment based on gross written premium, with a market share of less than 1%, as of September 2018.
During 2017, ASV presented an important increase in the loss ratio, after which the company took a series of measures in order to improve its underwriting quality and revise its cost structure. As of September 2018, the company continued to grow considerably, which allowed it to mitigate administrative expenses, and post a positive bottom line result of MXN 24.2 million.
Risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), remains strong, reflecting the capital support from its parent. The last capital contribution took place in 2017, in order to offset the net loss.
Going forward, AM Best expects ASV to stabilize its results and underwriting in the medium term and to keep expanding its distribution network to achieve a larger scale. Positive rating actions may occur if the company is able to improve its operating performance and capitalization while achieving a larger scale of business. Negative rating actions could occur if GFA’s support diminishes in A.M. Best’s view or if operating performance deteriorates and capital erodes significantly.
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