Market Overview

A.M. Best Affirms Credit Ratings of Stewart Title Guaranty de México, S.A. de C.V.


A.M. Best has affirmed the Financial Strength Rating of A-
(Excellent), the Long-Term Issuer Credit Rating of "a-" and the Mexico
National Scale Rating of "aaa.MX" of Stewart Title Guaranty de
México, S.A. de C.V.
(STGM) (Mexico). The outlook of these Credit
Ratings (ratings) is stable.

The ratings reflect STGM's balance sheet strength, which A.M. Best
categorizes as very strong, as well as its adequate operating
performance, neutral business profile and appropriate enterprise risk
management. The ratings also reflect the integration of the local
subsidiary to its parent company, Stewart Title Guaranty Company
(STGC) and to the Stewart Title Group in terms of the business
model and operational support. Offsetting these positive rating factors
are the company's small market share in Mexico's insurance industry and
its concentration in a single line of business.

STGM is a subsidiary of STGC, located in Houston, TX. In addition to
Mexico, STGC also offers products through its subsidiaries to markets in
the United States, the European Union, Australia, Costa Rica and China.
Given the specialized nature of the title product and the institutional
strategy, STGM's sales efforts are focused on business referred by the
parent company on existing customers, which generates a reduced number
of policies per year in a Mexican market consisting of just two

According to Best's Capital Adequacy Ratio, STGM's capitalization is
very strong, with an upward trend in capital and surplus growth during
the past five years, mainly driven by consistent positive bottom-line
results, with underwriting risk being the main component for required
capital. Support from STGC in the past has come through capital
injections directed to help strengthen the business when required.

The operating performance of STGM has been positive in the past five
years, which can be attributed mainly to the optimization of the
business strategy carried out in 2012-2013. This allowed STGM to reduce
expenses through a variable cost scheme. However, the company is exposed
to foreign exchange risk, as a big part of the investment portfolio is
in U.S. currency, and volatility, due to its small size.

Positive rating actions on the main operating subsidiaries of Stewart
Title Group that result from positive underwriting performance trends,
accompanied by growth in risk-adjusted capitalization, will prompt the
ratings of STGM to move in tandem. Conversely, negative rating actions
on Stewart Title Group due to a significant deterioration in operating
performance that causes a decline in risk-adjusted capitalization
levels, or if the group experiences liquidity issues, or a significant
increase in leverage, will also result in a ratings downgrade for the
Mexico subsidiary.

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
Best's Credit Ratings
. For information on the proper media
use of Best's Credit Ratings and A.M. Best press releases, please view
for Media - Proper Use of Best's Credit Ratings and A.M. Best Rating
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