MEXICO CITY–(BUSINESS WIRE)–Sixth paragraph, last sentence of release should read: As of June 2019, the company continued to post adequate underwriting results, investment yield and net income of MXN 2.4 billion (instead of MXN 2.4 million).
The corrected release reads:
AM BEST AFFIRMS CREDIT RATINGS OF GRUPO NACIONAL PROVINCIAL S.A.B.
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 Grupo Nacional Provincial S.A.B. (GNP) (Mexico City, Mexico). The outlook of these Credit Ratings (ratings) 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.
GNP is the largest domestic insurer within Mexico based on gross written premiums (GWP). 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, having benefited from additional equity surplus due to changes in statutory accounting at year-end 2016, and positive bottom-line results during 2016-2018.
The additional equity surplus is a consequence of implementing accounting measures 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 2018, GNP reported 7.9% growth in GWP, while maintaining profitable business in its core segments. The company’s operating performance remained solid, having benefited from better underwriting performance metrics, and a consistent improvement in the investment income. Policies were aligned to market changes, and the pricing model was improved to gain competitiveness and market share in low risk areas. As of June 2019, the company continued to post adequate underwriting results, investment yield and net income of MXN 2.4 billion.
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’s additional equity erodes 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.
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 Understanding 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.
AM Best is a global credit rating agency, news publisher and data provider specializing in the insurance industry. The company does business in more than 100 countries. Headquartered in Oldwick, NJ, AM Best has offices in cities around the world, including London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
Olga Rubo, FRM
+52 55 1102 2720, ext. 134
Manager, Public Relations
+1 908 439 2200, ext. 5159
Senior Director, Analytics
+52 55 1102 2720, ext. 107
Director, Public Relations
+1 908 439 2200, ext. 5644