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

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 Salud, Compañía de Seguros, S.A. (Gsalud) (Mexico City, Mexico). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Gsalud's balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

Gsalud's balance sheet strength is supported by risk-adjusted capitalization at the strongest level, as measured by Best's Capital Adequacy Ratio (BCAR), along with strong underwriting practices. The ratings also recognize Gsalud's affiliation and strategic importance to its ultimate parent, Peña Verde, S.A.B., the leading group in Mexico's insurance and reinsurance industries, which provides synergies and operating efficiencies. Offsetting these positive rating factors are Gsalud's concentration in a single line of business in Mexico's highly competitive health insurance market.

Gsalud is a fully owned subsidiary of General de Seguros, S.A.B. (Genseg) and is focused solely on health insurance. The company provides products mainly in the individual and collective health segments, as well as for major medical expenses. Gsalud has used the same distribution channels as Genseg, which involves agents, brokers and commercial offices.

Gsalud's strongest level of risk-adjusted capitalization has been maintained despite an increased risk appetite, as reflected by a higher exposure to shares, which makes the company susceptible to equity risk. Historically, the company's strong underwriting practices have resulted in positive technical performance with no dependence on investment revenue to achieve positive bottom line results. In 2019, underwriting practices, coupled with investments results, sustained profitability, as reflected in a 15% return on equity.

The company benefits from being integrated into the Peña Verde, S.A.B. group, gaining operational advantage through common systems, procedures and ERM practices.

Gsalud 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 strengthen its underwriting practices and increase its market scope.

Factors that may trigger positive rating actions include a consistent upward trend of positive underwriting results that strengthen profitability to operating performance levels that AM Best considers strong. The company's ratings could come under pressure should a lack of underwriting discipline result in overall profitability falling 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.

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