MEXICO CITY--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A- (Excellent), the Long-Term Issuer Credit Rating of “a-” and the Mexico National Scale Rating (NSR) of “aaa.MX”of General de Salud, Compañía de Seguros, S.A. (Gsalud) (Mexico City, Mexico). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Gsalud’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
Gsalud’s balance sheet strength is supported by risk-adjusted capitalization at a very strong level, as measured by Best’s Capital Adequacy Ratio (BCAR), strong underwriting practices and a supportive reinsurance program. The ratings also recognize Gsalud’s affiliation and strategic importance to its ultimate parent, Peña Verde, S.A.B., the leading group in Mexico’s (re)insurance industry, which provides synergies and operating efficiencies. Offsetting these positive rating factors are Gsalud’s concentration in one business line that is within Mexico’s highly competitive health insurance market.
Gsalud is a fully owned subsidiary of General de Seguros, S.A.B. (General de Seguros) and focused solely on health insurance. The company provides products mainly in the individual and collective health segments, as well as for major medical expenses. Gsalud has used the same distribution channels as General de Seguros, which involves agents, brokers and commercial offices.
Gsalud’s very strong risk-adjusted capitalization is maintained despite its increased risk appetite, as reflected by a higher exposure to shares, which makes the company susceptible to equity risk, according to BCAR. Historically, the company’s strong underwriting practices have resulted in positive technical performance with no dependence on investment revenue to achieve positive bottom line. AM Best expects the company to maintain this trend. In 2018, underwriting practices coupled with investments results, sustained profitability as reflected in a 7.8% return on equity.
The company benefits from being integrated into the Peña Verde, S.A.B. group, gaining operational advantage through common systems, procedures and ERM practices.
AM Best expects underwriting results to further reinforce the company’s operating performance, and thus capitalization levels. Factors that may trigger positive rating actions include a continued generation of underwriting earnings that strengthen risk-adjusted capitalization levels. The company’s current ratings could come under pressure should a lack of underwriting discipline result in overall profitability falling short of AM Best’s expectations, or if capitalization is no longer supportive of the current ratings.
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