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AM Best Upgrades Credit Ratings of Grupo Nacional Provincial S.A.B.

PR-Inside.com: 2018-12-06 21:00:02

AM Best Upgrades Credit Ratings of Grupo Nacional Provincial S.A.B.

Olga Rubo
Associate Financial Analyst
+52 55 1102 2720, ext. 134
olga.rubo@ambest.com

Alfonso Novelo
Senior Director, Analytics
+52 55 1102 2720, ext. 107
alfonso.novelo@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

AM Best has upgraded the Financial Strength Rating (FSR) to A (Excellent) from A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “a” from “a-” of Grupo Nacional Provincial S.A.B. (GNP) (Mexico City, Mexico). The outlook of these Credit Ratings (ratings) has been revised to stable from positive. In addition, AM Best has affirmed the Mexico National Scale Rating of “aaa.MX”. The outlook of this rating remains stable.

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

The rating upgrades reflect the continuing improvement in GNP’s risk-adjusted capitalization as a result of the positive bottom line results, as well as changes in accounting derived from the adoption of a Solvency II type framework.

GNP is the largest domestic capital insurer within Mexico based on premiums written. The company operates as a composite insurer of life and non-life business; core business segments include life, health and automobile coverage.

Dividend payments, driven by the company’s targets on capital efficiency, have partially restricted AM Best’s view of GNP’s risk-adjusted capitalization in the past. However, in recent years, GNP’s balance sheet strength, as measured by Best’s Capital Adequacy Ratio (BCAR), is very strong, benefitting from additional equity surplus due to changes in statutory accounting at year-end 2016, and positive bottom-line results during 2016-2017.

The additional equity surplus is a consequence of implementing accounting registers based on market value approximations of assets and liabilities. GNP follows conservative practices in terms of its asset-liability management. In addition, the company’s balance sheet strength is reinforced by its good reinsurance program placed with highly rated counterparties, which adequately protects the company’s risk retention. The effectiveness of these practices was demonstrated by the lack of any material impact on the company’s capital position from the September 2017 earthquakes in central Mexico.

During 2017, GNP reported marginal growth while maintaining profitable business in its core segments. The company adjusted its underwriting policies, resulting in better operating performance metrics in comparison with trends in previous years. As of June 2018, the company continued to post adequate underwriting results, investment yield and profitability.

Positive rating actions could take place if the company is able to maintain its current level of risk-adjusted capitalization while improving its bottom-line results and profitability indicators to levels more in line with highly rated peers. Negative rating actions could take place if the company erodes its additional equity with a sustained negative operating performance, or if the amount of dividends paid negatively impacts risk-adjusted capitalization to a level that is no longer supportive of the current rating levels.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, 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:

  • Best’s Credit Rating Methodology (Version, Oct. 13, 2017)
  • Evaluating Country Risk (Version, Oct. 13, 2017)
  • Understanding Universal BCAR (Version, May 14, 2018)
  • Catastrophe Analysis in AM Best Ratings (Version, Oct. 13, 2017)
  • Available Capital & Holding Company Analysis (Version, Oct. 13, 2017)
  • AM Best's Ratings On a National Scale (Version, Oct. 13, 2017)

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, please refer to Understanding Best’s Credit Ratings.

  • Previous Rating Date: November 17, 2017
  • Date of Financial Data Used: June 30, 2018

This press release relates to rating(s) that have been published on AM Best's website. For additional 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.

AM Best does not validate or certify the information provided by the client in order to issue a credit rating.

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.

AM Best’s credit ratings are independent and objective opinions, not statements of fact. AM Best is not an Investment Advisor, does not offer investment advice of any kind, nor does the company or its Ratings Analysts offer any form of structuring or financial advice. AM Best’s credit opinions are not recommendations to buy, sell or hold securities, or to make any other investment decisions. View our entire notice for complete details.

AM Best receives compensation for interactive rating services provided to organizations that it rates. AM Best may also receive compensation from rated entities for non-rating related services or products offered by AM Best. AM Best does not offer consulting or advisory services. For more information regarding AM Best’s rating process, including handling of confidential (non-public) information, independence, and avoidance of conflicts of interest, please read the AM Best Code of Conduct. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper [..].

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 © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Press Information


Published by
Hossam Abdel-Kader
+43 1 9582319
e-mail
http://www.pr-inside.com/


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