AM Best Affirms Credit Ratings of MAPFRE México, S.A.

OCTOBER 17, 2024 10:27 AM (EDT)

AM Best Affirms Credit Ratings of MAPFRE México, S.A.

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FOR IMMEDIATE RELEASE

MEXICO CITY - OCTOBER 17, 2024 10:27 AM (EDT)
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 of "aaa.MX" (Exceptional) of MAPFRE México, S.A. (MAPFRE Mexico) (Mexico City, Mexico). The outlook of these Credit Ratings (ratings) is stable.

MAPFRE Mexico is a member of MAPFRE S.A., which on a consolidated basis has a balance sheet strength that AM Best assesses as very strong, as well as strong operating performance, a favorable business profile and appropriate enterprise risk management (ERM).

MAPFRE Mexico's ratings also reflect its strategic importance to and alignment with MAPFRE Internacional S.A., as well as the synergies and operating efficiencies derived from being a group member of MAPFRE S.A., the leading insurer in Spain.

MAPFRE Mexico's ratings are derived from its solid risk-adjusted capitalization and underwriting strategy, as well as its competitive position in Mexico's insurance industry and appropriate ERM practices. Partially offsetting these positive rating factors are uncertain prospective opportunities for growth in Mexico's unwinding economy that has been slowing since 2018.

MAPFRE Mexico operates as a composite insurer of life and non-life business and ranks among the top 10 largest insurers in Mexico, based on gross written premium (GWP).

MAPFRE Mexico's GWP has presented stable growth after adjusting for the biannual property-liabilities policy of Petróleos Mexicanos, a state-owned oil and gas company that MAPFRE Mexico started underwriting in 2015 and renewed in 2019, 2021 and 2023; the most recent contract generated more than USD 676 million.

Despite underwriting losses since 2021, partially driven by life business, MAPFRE Mexico continues to adjust claims controls and pricing within its main segments, in conjunction with containing acquisition expenses. Financial income continued to influence the net result positively, which for 2023 was MXN 595 million.

The very strong assessment for MAPFRE Mexico's balance sheet strength, as measured on a consolidated basis, remains slightly dependent upon dividend payments to its holding company. In the medium term, AM Best expects MAPFRE Mexico's continued fine-tuning of its underwriting strategy to enhance net results, and therefore, the continued expansion of its capital base.

MAPFRE Mexico's ERM practices are well-established and implemented throughout the company and closely follow those set by MAPFRE S.A. This integration has benefited the company's implementation of Mexico's Solvency II-type regulations.

If there are negative rating actions on the MAPFRE group, as a result of a sustained decline in operating performance below AM Best's expectation for the strong assessment level, or a sustained deterioration in MAPFRE S.A.'s consolidated risk-adjusted capitalization, the ratings of MAPFRE Mexico would mirror those same actions.

A change in AM Best's perception regarding the actual or perceived level of MAPFRE Mexico's strategic importance to the MAPFRE group also could impact the company's ratings.

The methodology used in determining these ratings is Best's Credit Rating Methodology (Version Aug. 29, 2024), which provides a comprehensive explanation of AM Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Key insurance criteria reports utilized:

· Available Capital and Insurance Holding Company Analysis (Version Aug. 15, 2024)

· Best´s National Scale Ratings (Version May 16, 2024)

· Catastrophe Analysis in AM Best Ratings (Version Feb. 8, 2024)

· Evaluating Country Risk (June 6, 2024)

· Scoring and Assessing Innovation (Feb. 27, 2023)

· Understanding Global BCAR (Version Aug. 1, 2024)

View a general description of the policies and procedures used to determine credit ratings. For information on the meaning of ratings, structure, voting and the committee process for determining the ratings and monitoring activities, relevant sources of information and the frequency for updating ratings, please refer to Guide to Best's Credit Ratings.

· Previous Rating Date: Oct. 18, 2023

· Initial Rating Date: Oct. 22, 1999

· Date Range of Financial Data Used: Dec. 31, 2018- Dec. 31, 2023

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While the information obtained from the material source(s) is believed to be reliable, its accuracy is not guaranteed. AM Best does not audit the company's financial records or statements, or otherwise independently verify the accuracy and reliability of the information; therefore, AM Best cannot attest as to the accuracy of the information provided.

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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.