AM Best has affirmed the Financial Strength Rating (FSR) of A- (Excellent), the Long-Term Issuer Credit Rating (Long-Term ICR) of "a-" and the Mexico National Scale Rating of "aaa.MX" of Zurich Aseguradora Mexicana, S.A. de C.V. (ZAM) (formerly QBE de México Compañía de Seguros, S.A. de C.V.) (Mexico). The outlook of the Credit Ratings (ratings) is stable. Concurrently, AM Best has withdrawn these ratings as the company has requested to no longer participate in AM Best’s interactive rating process.
The ratings reflect ZAM’s balance sheet strength, which AM Best categorizes as very strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management.
The ratings also recognize ZAM’s affiliation and strategic importance to Zurich Insurance Group Ltd (Zurich group), its ultimate parent, which provides synergies and operating efficiencies. Offsetting these positive rating factors are the company’s small size within Mexico’s insurance market and the volatility in its operating results.
The stable outlooks reflect the expectation that ZAM will maintain its overall balance sheet assessment, supported by risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR).
The company was founded in Mexico more than 70 years ago, and in 2007, was acquired by QBE Insurance Group Limited. During 2018, Zurich group entered into an asset purchase agreement to acquire QBE Group’s insurance operations in Argentina, Brazil, Colombia, Ecuador and Mexico, with the purpose of increasing its presence and growth in Latin American markets. The new business strategy for ZAM is to serve as a strategic hub for Zurich group, mainly underwriting life insurance, along with accident and health insurance (i.e., affinity business lines). A greater part of the portfolio corresponding to the business lines of fire, liabilities, marine and cargo, technical and catastrophe was transferred to Zurich Compañia de Seguros, S.A., and the rest is undergoing a run-off process.
ZAM’s risk-adjusted capitalization is supported by positive bottom-line results achieved in 2019 and as of June 2020. During this period, the company improved its operating performance, aided by the positive effects of reserve releases and adjustments to its reinsurance program that substantially reduced ZAM’s retention on property/casualty lines of business. Analogously with the new market strategy, the affinity business lines are 100% retained.
The company’s investment strategy continues to be conservative, and in line with local and group guidelines, providing a steady flow of revenues to back its operating results.
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 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.
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