Market Overview

A.M. Best Affirms Credit Ratings of Sompo Seguros Mexico, S.A. de C.V.


A.M. Best has affirmed the Financial Strength Rating of A+
(Superior), the Long-Term Issuer Credit Rating of "aa-", and the Mexico
National Scale Rating of "aaa.MX" of Sompo Seguros Mexico, S.A. de
(Sompo Mexico) (Mexico City, Mexico). The outlook of these
Credit Ratings (ratings) is stable.

The ratings reflect Sompo Mexico's balance sheet strength, which A.M.
Best categorizes as strongest, as well as its strong operating
performance, favorable business profile and appropriate enterprise risk
management (ERM).

The ratings of Sompo Mexico also reflect the company's integration and
support from its group through its holding company, Sompo America
Insurance Company
(SAIC), which provides synergies and operating
efficiencies to the Mexico subsidiary. Sompo Mexico maintains strong
risk-adjusted capitalization, good operating performance and a solid
reinsurance program. Partially offsetting these positive rating factors
is the company's small market share, even though its combined ratio and
profitability levels compare well with the industry.

Sompo Mexico initiated activities in 1998; the company underwrites
property/casualty business and stands as a strategic hub from which its
group plans to continue expanding operations into other Latin America
markets. Sompo Mexico exclusively underwrites referred business from its
group, whose ultimate parent is SOMPO Holdings, Inc.

Sompo Mexico's strong risk-adjusted capitalization, as measured by
Best's Capital Adequacy Ratio (BCAR), is supported by the company's
small retention profile, historical positive bottom-line results
reflected in good profitability metrics and conservative profit
retention policies. Sompo Mexico's strong underwriting results are
mainly a consequence of underwriting referred businesses for the Mexico
operations of its group's global clients, as well as commissions from a
diversified reinsurance program with highly rated reinsurers, which
includes SAIC as the program leader. In addition, the company's
conservative investment policies provide a steady flow of revenues in
support of net income. In 2017, Sompo Mexico maintained its steady
operating performance, reflected in an average five-year combined ratio
of 12.3% and return on equity of 16.8%. Moreover, the company benefits
from being integrated into the group, gaining operational leverage
through the same systems, procedures and ERM practices.

Positive rating actions on the group will most likely result in
equivalent rating actions for Sompo Mexico, unless A.M. Best determines
that the strategic importance of the Mexico subsidiary to its group has
decreased. Sompo Mexico also has to maintain strong risk-adjusted
capitalization supported by good technical and bottom-line results in
order for positive rating actions to occur. Conversely, the ratings of
Sompo Mexico will mirror any negative rating actions taken on the group.
Sustained deterioration in operating performance that leads to a
significant decline in its risk-adjusted capitalization to levels no
longer supportive of the current ratings also would trigger negative
rating actions. Potential large-scale catastrophe events or a failure by
the group to execute its merger & acquisition strategy also could cause
downward ratings pressure if the financial condition is adversely

This press release relates to Credit Ratings that have been published
on A.M. 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 A.M. Best's
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 A.M. Best press releases, please view
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