MEXICO CITY, June 08, 2022--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A+ (Superior), the Long-Term Issuer Credit Rating of "aa-" (Superior) and the Mexico National Scale Rating of "aaa.MX" (Exceptional) of Berkley International Seguros Mexico S.A. (BSM) (Mexico City, Mexico). The outlook of these Credit Ratings (ratings) is stable.
BSM is a member of W. R. Berkley Insurance Group (Berkley Group), which on a consolidated basis, has a balance sheet strength that AM Best assesses as strongest, as well as strong operating performance, a favorable business profile and appropriate enterprise risk management (ERM).
The ratings reflect BSM’s substantial reinsurance support from its group through the Berkley Insurance Company. Additionally, the ratings factor in BSM’s integration with its parent company, W. R. Berkley Corporation (W. R. Berkley), in terms of underwriting, ERM and capital commitments. Limiting the ratings is the inherent risk of a startup company implementing its business plan amid the challenges derived from the weakening of the Mexico’s economy.
BSM was formed in November 2016, and is the Mexico subsidiary of W. R. Berkley; the company received regulatory approval for operations in June 2017 and issued its first policy in July of that year. The company offers a diversified slate of property/casualty products strongly backed up by treaty and facultative reinsurance contracts with its parent company.
BSM’s solid risk-adjusted capitalization is derived from its strong capital position, in support of its premium growth during its initial years of operation. This was further strengthened by the 95/5 percent quota share and excess of loss contracts provided by its parent. Furthermore, AM Best recognizes W. R. Berkley’s commitment to its subsidiaries through additional capital fungibility to the Mexico operation.
BSM has been able to grow it business volume during the past five years. BSM’s management and underwriting team have been able to navigate successfully the changes in the economic dynamics of the past two years. Following a reduction in activity due to quarantine measures that impacted BSM’s claim levels positively, the company made adjustments in pricing and risk selection as these activity levels returned to normal, which allowed it to maintain a stable cost structure. The company presented positive bottom line results for the second time since the beginning of its operations, underpinned by premium sufficiency.
If negative rating actions are taken on the main operating subsidiaries of the Berkley Group for a significant drop in equity, preventing the organization from maintaining the expected risk-adjusted capital levels, BSM’s ratings likely would move in tandem. Negative rating actions also could occur to the insurance operations of BSM as a result of a sustained deterioration in its underwriting or operating results, driven by either current accident year results or adverse development of loss reserves from prior years. If the ultimate parent’s financial position weakens, requiring the withdrawal of capital from the group’s various insurance companies or increases financial leverage or leads to a decline in interest coverage at the holding company that is not supportive of the current ratings level, negative rating actions could be taken on the Berkley Group, and BSM’s ratings would reflect those actions.
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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
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