AM Best Affirms Credit Ratings of Berkley International Seguros Mexico S.A.
MEXICO CITY–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of A+
(Superior), the Long-Term Issuer Credit Rating of “aa-” and the Mexico
National Scale Rating of “aaa.MX” of Berkley International Seguros
Mexico S.A. (BSM) (Mexico City, Mexico). The outlook of these Credit
Ratings (ratings) is stable.
BSM is a member of W. R. Berkley Insurance Group (Berkley Group), which
on a consolidated basis, has a balance sheet strength that AM Best
categorizes as strongest, as well as strong operating performance, a
favorable business profile and appropriate enterprise risk management
(ERM).
The ratings reflect BSM’s substantial reinsurance support from its group
through the Berkley Insurance Company. Additionally, the ratings factor
in BSM’s integration with its parent company, W. R. Berkley Corporation
(W. R. Berkley), in terms of underwriting, ERM and capital commitments.
Limiting the ratings is the inherent risk of a startup company
implementing its business plan and the potential for volatility in
Mexico’s economy during 2019.
BSM was formed in November 2016, and is the Mexico subsidiary of W. R.
Berkley; the company received regulatory approval for operations in June
2017 and issued its first premium in July of that year. The company
offers a diversified slate of property/casualty products strongly backed
up by treaty and facultative reinsurance contracts with its parent
company.
BSM’s solid risk-adjusted capitalization is derived from its strong
capital position, in support of its premium growth during its initial
years of operation. This was further strengthened by the 95/5 percent
quota share and excess of loss contracts provided by its parent.
Furthermore, AM Best recognizes W. R. Berkley’s commitment to its
subsidiaries through additional capital fungibility to the Mexico
operation.
As a recently formed company, BMS will have to produce sufficient volume
to compensate for its fixed costs, while posting adequate underwriting
performance on its retained premium. While BSM’s management and
underwriting team have a successful track record, the business plan
implementation has to evolve for AM Best to evaluate the company’s
operating performance adequately.
The Mexico property/casualty insurance sector experienced a decline
during 2018, and further hurdles may arise due to changes in the
economic environment as a result of the new government, which could
cause potential volatility in 2019, and hamper the company’s growth
prospects.
If positive rating actions are taken on the main operating subsidiaries
of the Berkley Group for substantial and sustained improvement in its
operating performance metrics relative to their peers, BSM’s ratings
likely would move in tandem. Conversely, if negative rating actions are
taken on the Berkley Group, as a result of a sustained deterioration in
the group’s underwriting or operating results, the ratings of BSM would
mirror those same actions. Negative rating action also could be driven
by accident year results or adverse development of prior years’ loss
reserves at the parent level, or result from a change in the financial
position of the group’s holding company that prompts the withdrawal of
capital from the group or causes an increase in financial leverage or
decline in interest coverage at the holding company that is not
supportive of the current ratings.
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 Understanding
Best’s Credit Ratings. For information on the proper media
use of Best’s Credit Ratings and AM Best press releases, please view Guide
for Media – Proper Use of Best’s Credit Ratings and AM Best Rating
Action Press Releases.
AM Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit www.ambest.com
for more information.
Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.
Contacts
Olga Rubo
Financial Analyst
+52 55 1102 2720,
ext. 134
olga.rubo@ambest.com
Christopher Sharkey
Manager, Public Relations
+1
908 439 2200, ext. 5159
christopher.sharkey@ambest.com
Alfonso Novelo
Senior Director, Analytics
+52
55 1102 2720, ext. 107
alfonso.novelo@ambest.com
Jim Peavy
Director, Public Relations
+1 908
439 2200, ext. 5644
james.peavy@ambest.com