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AM Best Affirms Credit Ratings of General de Seguros, S.A.B.

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AM Best has affirmed the Financial Strength Rating of A- (Excellent), the Long-Term Issuer Credit Rating of "a-" and the Mexico National Scale Rating (NSR) of "aaa.MX" of General de Seguros, S.A.B. (Genseg) (Mexico City, Mexico). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Genseg's balance sheet strength, which AM Best categorizes as strongest, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management.

The ratings also recognize Genseg's affiliation and strategic importance to its ultimate parent, Peña Verde, S.A.B., a leading group in Mexico's insurance and reinsurance industries, which provides synergies and operating efficiencies, as well as the reinsurance support provided by affiliated company, Reaseguradora Patria, S.A.

Genseg initiated operations in Mexico City in 1970. The company mainly underwrites motor, accident and health, a mix of property/casualty and life insurance lines and historically has participated in the crop insurance market. Genseg operates throughout Mexico with a network of independent agents, brokers and commercial offices.

Genseg's balance sheet strength is supported by risk-adjusted capitalization at the strongest level, as measured by Best's Capital Adequacy Ratio (BCAR). The company's capitalization and liquidity provide Genseg with flexibility to cover deviations in claims or volatile securities market conditions without having to realize losses in its investment portfolio. The company's capitalization is further supported by a reinsurance program placed with highly rated entities.

Historically, operating performance been limited by underwriting performance and investment valuation. However, the company shifted its investment strategy in order to offset volatility, and in 2019, investment income improved, leading to positive bottom-line results. As of June 2020, the effects of the COVID-19 pandemic on Mexico's stock market, as well as the continuous decline in Mexico's sovereign debt rating, have caused losses in the valuation of Genseg's investments, further limiting operating performance in 2020.

Genseg is undergoing a comprehensive transformation project, which includes the implementation of a new core system, pricing and risk-assessment tools, digital platforms and products for agents and policyholders, as part of its strategy to achieve premium sufficiency and increase its market scope.

Factors that may trigger positive rating actions include an improved and constant upward trend in operating performance, as measured by Genseg's underwriting quality and positive bottom-line results. The company's ratings could come under pressure should soft market conditions continue and if a lack of underwriting discipline generates negative technical results, causing profitability to fall short of AM Best's expectations, or if capitalization is no longer supportive of the ratings. Negative rating actions also could take place if the support provided by its group, Peña Verde, S.A.B., would weaken in AM Best's view.

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 media use of Best's Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best's Credit Ratings and AM Best Rating Action Press Releases.

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 New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2020 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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