Moody's spares Mexican insurers, maintains stable outlook
In the wake of changing its outlook to ‘negative’ for Mexico’s sovereign ratings Wednesday, Moody's affirmed its ratings and ‘stable’ outlooks for 12 of the 13 insurers it rates in the country, asserting “a potential downgrade of the Mexican sovereign rating would not exert significant downward pressure on the companies' credit profiles.”
The agency affirmed the global scale ratings (GSR) and national scale ratings (NSR) insurance financial strength (IFS) ratings for all rated insurers in the country adding the exception that “the outlook of MBIA México remains developing.”
The agency said in the announcement that any potential downgrade on the Mexican sovereign “would have a limited effect on their ratings because they are all positioned below the sovereign rating.”
Moody’s added Mexican insurers are helped by their minimal reliance on debt issuances for funding or financing purposes, noting that the firms have strong liquidity positions supported by steady revenue via premiums.
“Insurers also benefit from their profitability and from the internal capital generation that derives from insurance underwriting, in addition to investment activities,” said the firm. “These considerations broadly support rating stability of the sector.”
Threat to revenue
Moody’s, however, did not make mention of the looming threat of blanket tariffs on Mexican exports to the US, an issue insurer ratings agency AM Best did address Wednesday.
Alfonso Novelo, senior director of analytics for AM Best, told BNamericas that should the 5% tariffs actually materialize – and they may well not – the insurance ratings agency could cut premium growth forecasts for the local industry by at least a percentage point to between 1% and 2%, from the current forecast of 3% premium growth in 2019.
The following 12 insurers' GSR and NSR IFS ratings were affirmed, and their outlooks remain stable:
- Aseguradora Aserta, S.A. de C.V., Grupo: Baa2/Aa2.mx
- Aseguradora Insurgentes, S.A. de C.V., Grupo: Baa2/Aa2.mx
- Aseguradora Patrimonial Daños, S.A.: Ba1/A1.mx
- Aserta Seguros Vida, S.A. de C.V.: Ba1/A1.mx
- Coface Seguro de Crédito México, S.A. de C.V.: Baa1/Aa1.mx
- Liberty Fianzas, S.A. de C.V.: Baa1/Aa1.mx
- Plan Seguro, S.A. de C.V., Co. de Seguros: Baa3/Aa3.mx
- Prudential Seguros México, S.A. de C.V.: Baa2/Aa2.mx
- Seguros Sura, S.A. de C.V.: Baa3/Aa3.mx
- Seguros Azteca Daños, S.A. de C.V.: Ba1/ A1.mx
- Seguros Azteca, S.A de C.V.: Ba1/A1.mx
- Chubb Fianzas Monterrey, Aseguradora de Caución S.A.: Baa1/Aa1.mx
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