Market Overview

A.M. Best Assigns Credit Ratings to Berkley International Fianzas Mexico S.A.

Share:

A.M. Best has assigned a Financial Strength Rating of A+
(Superior), a Long-Term Issuer Credit Rating of "aa-" and a Mexico
National Scale Rating of "aaa.MX" to Berkley International Fianzas
Mexico S.A.
(BFM) (Mexico City, Mexico). The outlook assigned to
these Credit Ratings (ratings) is stable.

The ratings reflect BFM's balance sheet strength, which A.M. Best
categorizes as very strong, as well as its marginal operating
performance, neutral business profile and appropriate enterprise risk
management (ERM). The ratings of BFM also reflect its affiliation with
its parent company W.R. Berkley Corporation (W. R. Berkley) in
terms of underwriting, reinsurance protection, ERM and capital
commitments. Limiting the ratings is the inherent risk of a startup
company implementing its business plan and the potential volatility of
Mexico's economy during 2018.

BFM is the Mexico surety subsidiary of W. R. Berkley, formed in November
2016; the company received regulatory approval for operations in June
2017 and issued its first policy that same month. The company plans to
develop a regional presence in northwest Mexico, through a predominant
mix of administrative surety and a lesser portion of credit and judicial
products strongly backed up by a comprehensive reinsurance contract with
its parent company.

BFM's very strong balance sheet assessment is derived from its strong
capital position in support of its premium growth during its first years
of operation, which is further strengthened by the comprehensive
reinsurance contract with its parent company. Furthermore, A.M. Best
recognizes W.R. Berkley's commitment to its subsidiaries providing
additional capital fungibility to the Mexico operation.

The marginal assessment on operating performance is due to the start-up
nature of the company and its lack of a track record. While the BFM
management and underwriting team have a successful track record of their
own, the business plan implementation has to evolve for A.M. Best to
adequately evaluate the company's operating performance.

As of June 2017, the surety market decreased 0.4% in real terms due to
less public spending on infrastructure projects and an economic
environment for investments that has remained slow. These conditions
could continue amid possible economic volatility in 2018 during the
country's presidential campaigns and voting results, which could
potentially limit the growth prospects of the company.

Positive rating actions could mirror those of its group if the
subsidiary is able to achieve its commercial goals while posting sound
operating performance and maintaining its very strong balance sheet
assessment. Negative rating actions could take place if the company's
financial performance impacts its capital or if premium volume is no
longer supported by its risk-adjusted capitalization, as measured by
Best's Capital Adequacy Ratio (BCAR).

The methodology used in determining these ratings is Best's Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best's rating process and contains the different rating criteria
employed in the rating process. Best's Credit Rating Methodology can be
found at www.ambest.com/ratings/methodology.

Key insurance criteria reports utilized:

  • Evaluating Country Risk (Version Oct. 13, 2017)
  • Understanding Universal BCAR (Version Oct. 13, 2017)
  • Available Capital & Holding Company Analysis (Version Oct. 13, 2017)
  • Rating New Company Formations (Version Oct. 13, 2017)
  • A.M Best Ratings on a National Scale (Version Oct. 13, 2017)
  • Rating Surety Companies (Version Oct. 13, 2017)

View a general description of the policies
and procedures
used to determine credit ratings. For information on
the meaning of ratings, structure, voting and the committee process for
determining the ratings and monitoring activities, please refer to Understanding
Best's Credit Ratings
.

  • Previous Rating Date: Not Rated
  • Date of Financial Data Used: December 31, 2017.

This press release relates to rating(s) that have been published on
A.M. Best's website. For additional 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 A.M. Best's
Recent
Rating Activity
web page.

A.M. Best does not validate or certify the information provided by
the client in order to issue a credit rating.

While the information obtained from the material source(s) is
believed to be reliable, its accuracy is not guaranteed. A.M. Best does
not audit the company's financial records or statements, or otherwise
independently verify the accuracy and reliability of the information;
therefore, A.M. Best cannot attest as to the accuracy of the information
provided.

A.M. Best's credit ratings are independent and objective opinions,
not statements of fact. A.M. Best is not an Investment Advisor, does not
offer investment advice of any kind, nor does the company or its Ratings
Analysts offer any form of structuring or financial advice. A.M. Best's
credit opinions are not recommendations to buy, sell or hold securities,
or to make any other investment decisions. View our
entire
notice
for complete details.

A.M. Best receives compensation for interactive rating services
provided to organizations that it rates. A.M. Best may also receive
compensation from rated entities for non-rating related services or
products offered by A.M. Best. A.M. Best does not offer consulting or
advisory services. For more information regarding A.M. Best's rating
process, including handling of confidential (non-public) information,
independence, and avoidance of conflicts of interest, please read the
A.M.
Best Code of Conduct
. For information on the proper media use
of Best's Credit Ratings and A.M. Best press releases, please view
Guide
for Media - Proper Use of Best's Credit Ratings and A.M. Best Rating
Action Press Releases
.

A.M. Best is the world's oldest and most authoritative insurance
rating and information source. For more information, visit
www.ambest.com.

Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.

View Comments and Join the Discussion!