AM Best Affirms Credit Ratings of Seguros El Potosí, S.A.

MEXICO CITY--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A- (Excellent), the Long-Term Issuer Credit Rating of “a-” (Excellent) and the Mexico National Scale Rating (NSR) of “aaa.MX” (Exceptional) of Seguros El Potosí, S.A. (El Potosí) (San Luis Potosi, Mexico). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect El Potosí’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

The stable outlooks reflect the company’s ability to adjust its underwriting strategy to protect its bottom-line results, and consequently, the strength of its capital base.

El Potosí’s very strong balance sheet strength recognizes the company’s ability to adequately match its obligations with its risk appetite, while implementing its growth strategy and carrying dividend payments to their shareholders. The very strong assessment also recognizes the conservative profile of El Potosí’s investment portfolio and concentration in Mexico fixed income securities.

While El Potosí has historically posted positive bottom-line results, the company’s operating performance was impacted in 2022 by claims in the auto line of business, driven by the increase in mobility and traffic, coupled with rising auto part costs due to supply chain disruptions in the automobile industry. The company has taken measures to improve technical results, and AM Best expects El Potosi to return to premium sufficiency levels.

AM Best assesses the company’s business profile as neutral; the company underwrites premiums across several states through a mix of distribution channels and has a diversified portfolio of products. However, underwriting risks are concentrated in Mexico. El Potosí’s ERM is considered appropriate, as it is well-integrated into its operations. The company has a sound reinsurance program in place with highly rated reinsurers with an excellent level of security.

Negative rating actions could occur if El Potosí is not able to improve on current claim results and it translates into a downward trend of negative bottom-line results, destabilizing El Potosí's key operating metrics. Negative rating actions also could occur if risk-adjusted capitalization deteriorates due to a significant cash withdrawal or a decline in operating results that ultimately translates into an eroded capital base.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2023 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.