AM Best upgrades Grupo Mexicano de Seguros; praises reinsurance programme
Grupo Mexicano de Seguros (GMX), the Mexican property/casualty insurer, has been upgraded by AM Best, partly because of improved underwriting practices and its reinsurance programme.
The rating agency revised the Mexico national scale rating (NSR) of GMX to a+.MX from a.MX and affirmed its financial strength rating (FSR) of B++ (Good).
The NSR outlook of the Mexican property/casualty (P&C) insurer has been upgraded to positive from stable, while its FSR remains stable.
AM Best said the actions reflect GMX’s “improved underwriting practices and reinsurance programme placed among counterparties with a strong level of security and a well-planned business strategy, in line with a strong risk-adjusted capitalisation level.”
Offsetting these positive rating factors are the strong competitive environment GMX experiences in its main business lines that could pressure future underwriting performance.
The company initiated operations in Mexico City in 1998. GMX underwrites property/casualty insurance and ranked twelfth in this segment, with 2.7 percent market share based on written premiums in 2015.
The company’s main business line is personal liabilities, and it operates mainly through a network of independent agents and promoters, as well as online sales.
AM Best noted that during 2015, the company improved underwriting results through an important increase in premiums in conjunction with a lower volume of claims posted by the aviation segment, which historically has been one of the company’s sources of volatility in results, in conjunction with continued positive performance of its liabilities segment.
“Thus, enhancing overall profitability as demonstrated by improvements in 2015 and expected 2016 combined ratios.
“Furthermore, adjustments to the company’s reinsurance programme have reduced retention levels on fire and other catastrophe lines of business, which also contributed to good operating performance in 2016 and lower-than-expected volatility in underwriting results,” the rating agency said.
