A.M. Best Upgrades Issuer Credit Rating of Atradius Seguros de Crédito, S.A.
Olga Rubo, +52 55 1102 2720, ext. 134
Associate Financial Analyst
Alfonso Novelo, +52 55 1102 2720, ext. 107
Senior Director, Analytics
Christopher Sharkey, +1 908 439 2200, ext. 5159
Manager, Public Relations
Jim Peavy, +1 908 439 2200, ext. 5644
Director, Public Relations
A.M. Best has upgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “a+” from “a” and affirmed the Financial Strength Rating of A (Excellent) and the Mexico National Scale Rating of “aaa.MX” of Atradius Seguros de Crédito, S.A. (Atradius Mexico) (Mexico City, Mexico). The outlook of these Credit Ratings (ratings) is stable.
Atradius Mexico is a member of the Atradius group, which on a consolidated basis has a balance sheet strength, which A.M. Best categorizes as very strong, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management (ERM).
The Long-Term ICR upgrade reflects the track record of Atradius Mexico’s parent company, Atradius N.V., with respect to its strong operating performance across the underwriting cycle, demonstrated by a 10-year average combined ratio of 88% (2008-2017). A.M. Best expects continued strong earnings, together with clear capital management targets, to support risk-adjusted capitalization being maintained at the strongest level.
The ratings also reflect Atradius Mexico’s strategic importance to the overall Atradius group, given its leading position within the credit insurance segment in Mexico, its importance as a gateway to Latin America’s market, good financial flexibility derived from its strong capitalization, supportive reinsurance provided by the group and its seasoned management team. These positive rating factors are offset partially by volatility in the company’s net income due to the intrinsic volatility in the credit insurance market.
The company benefits from its integration within the Atradius group, which allows it to leverage operations on the same practices and procedures, reinsurance, draft facilities and underwriting selection. In addition, its ERM practices show a high level of integration to Atradius N.V.
Atradius Mexico offers credit insurance in its domestic market and was ranked as Mexico’s largest credit insurer as of December 2017. The three largest participants in this line of business hold more than 90% of the market share.
Atradius Mexico’s financial performance compares favorably with that of its peers in Mexico’s credit insurance industry, and it has posted better-than-average loss ratios due to its underwriting and collection practices. As of 2017, Atradius Mexico’s profitability continues to be supported by sound underwriting and expense control practices, steady investment income, and a high amount of commissions received by reinsurance, which translate into negative acquisition costs.
Atradius Mexico’s capitalization is very strong, as measured by Best’s Capital Adequacy Ratio (BCAR), and as a result, the company maintains significant financial flexibility. Furthermore, A.M. Best expects the company to sustain its capitalization level. Atradius Mexico’s reinsurance program is placed with Atradius Reinsurance Designated Activity Company, further demonstrating the support received by the group.
If there are positive rating actions on the main operating subsidiaries of Atradius N.V., as a result of a change in the key rating fundamentals of Atradius N.V.’s parent company, Grupo Catalana Occidente, S.A., the ratings of Atradius Mexico likely would move in tandem. Likewise, if there are negative rating actions on the Atradius group, as a result of a sustained decline in operating performance or a sustained deterioration in Atradius N.V.’s consolidated risk-adjusted capitalization, the ratings of Atradius Mexico would mirror those same actions.
A change in A.M. Best’s perception regarding the ability to deploy capital across the Atradius group of companies could impact Atradius Mexico’s inclusion in the group.
This press release relates to Credit Ratings that have been published on A.M. 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 A.M. 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 A.M. Best press releases, please view Guide for Media - Proper [..].
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