MEXICO CITY--(BUSINESS WIRE)--AM Best has downgraded the Financial Strength Rating to B (Fair) from B+ (Good), the Long-Term Issuer Credit Rating to “bb” (Fair) from “bbb-” (Good) and the Mexico National Scale Rating to “a.MX” (Excellent) from “aa-.MX” (Superior) of Insignia Life S.A. de C.V. (Insignia) (Mexico). Concurrently, AM Best has placed these Credit Ratings (ratings) under review with negative implications. These rating actions follow the sustained deterioration of the financial strength of its parent, Proyecto Insignia, S.A.P.I. de C.V.(PIN), and its potential effects on Insignia’s balance sheet strength.
The ratings reflect Insignia’s balance sheet strength, which AM Best assesses as strong as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
Insignia's operating results have been impacted heavily by COVID-19-related claims during the past two years, on which significant losses reported in the operating entity have in turn translated into a severe weakening of PIN’s capital base, further deteriorating its already elevated financial leverage. The under review with negative implications status points to the impact that the high financial leverage at the holding company level could have on Insignia’s balance sheet strength, as the sole source of revenue of its parent company. In addition, the ongoing losses in net results could potentially result in a sharp decrease in risk-adjusted capitalization. AM Best will continue to monitor this situation as it evolves.
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