AM Best Affirms Credit Ratings of SPP Institución de Seguros, S.A. de C.V.
01 Agosto 2024 - 4:32PM
Business Wire
AM Best has affirmed the Financial Strength Rating of B+
(Good), the Long-Term Issuer Credit Rating of “bbb-” (Good) and the
Mexico National Scale Rating of “aa-.MX” (Superior) of SPP
Institución de Seguros, S.A. de C.V. (SPP Seguros) (Mexico City,
Mexico). The outlook of these Credit Ratings (ratings) is
stable.
The ratings reflect SPP Seguros’ balance sheet strength, which
AM Best assesses as strong, as well as its adequate operating
performance, limited business profile and appropriate enterprise
risk management.
The ratings also reflect the company’s strongest level of
risk-adjusted capitalization, as measured by Best’s Capital
Adequacy Ratio (BCAR), evidence of capital support from the main
shareholder and prudent investment practices. Limiting SPP Seguros’
ratings is the inherent risk of a new company implementing its
business plan, the expansion risk arising from its new
property/casualty (P/C) segments, and the volatility of the
prospective underwriting portfolio.
SPP Seguros is a Mexico-based company that began operations in
2019. The main shareholder is Juan Carlos Merlo, who has an
ownership stake of 51%; and the rest of the shares are held by
Global Insurance Group Holding Company, Inc., a San Antonio,
TX-domiciled entity that owns several insurance-related
businesses.
SPP Seguros is focused on guaranteeing quality in construction
and providing protection against unforeseen events and accidents.
As of December 2023, the company’s business portfolio was composed
almost entirely of P/C business (99.7%) with 0.3% in personal
accident coverage. Within Mexico’s market, SPP Seguros has a market
share of less than 1%.
As of 2024, the company is seeking authorization to underwrite
the business lines of civil liability and professional risks,
marine and transport, fire, agricultural, animal and catastrophe
risks, and auto. SPP Seguros intends to expand its range of
offerings to the market and cover additional insurance needs.
SPP Seguros’ risk-adjusted capitalization is at the strongest
level, as measured by BCAR, with underwriting risk standing as the
main component for required capital. Support from SPP Seguros’ main
shareholder has been reflected in capital injections to back up its
growth and provide financial flexibility. Overall, the company’s
balance sheet is strong, but it is subject to volatility derived
from its net business portfolio distribution and growth.
As of year-end 2023, SPP Seguros’ gross written premium stood at
MXN 73.6 million, and it had a combined ratio of 74.7%. The
positive bottom-line results also continued into May 2024. SPP
Seguros’ investment income has been stable, and its investment
profile is expected to remain the same in the coming years,
supporting its income generation.
Factors that could lead to positive rating actions include
continued growth of the company’s capital base in the medium term,
supportive of the current level of risk-adjusted capitalization, as
measured by BCAR, and successful consolidation of the company’s
business strategy in targeted locations. Negative rating actions
could occur if premium growth or adverse development of the
underwriting portfolio erodes the company’s capital base and
reduces risk-adjusted capitalization to a level that no longer
supports the ratings.
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.
Copyright © 2024 by A.M. Best Rating
Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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Olga Rubo, FRM Senior 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 Associate
Director, Public Relations +1 908 882 2310
christopher.sharkey@ambest.com Al Slavin Senior Public
Relations Specialist +1 908 882 2318
al.slavin@ambest.com