AM Best Maintains Credit Ratings for Seguros El Potosí, S.A

AM Best has reaffirmed Seguros El Potosí, S.A.’s (El Potosí) Financial Strength Rating of A- (Excellent), its Long-Term Issuer Credit Rating of “a-” (Excellent), and its Mexico National Scale Rating (NSR) of “aaa.MX” (Exceptional). The outlook for these ratings remains stable.

These ratings reflect El Potosí’s very strong balance sheet strength, adequate operating performance, neutral business profile, and appropriate enterprise risk management (ERM).

El Potosí’s very strong balance sheet strength acknowledges its ability to effectively match obligations with its risk appetite while pursuing its growth strategy and distributing dividends to shareholders. Additionally, the company’s conservative investment portfolio, mainly focused on Mexico fixed income securities, contributes to this assessment.

While El Potosí faced challenges in its operating performance in 2022 due to increased claims in the auto line of business stemming from higher mobility and traffic, as well as supply chain disruptions in the automobile industry, the company implemented measures to improve technical results and returned to premium sufficiency levels in 2023.

The company’s business profile is deemed neutral, with premiums underwritten across several states through various distribution channels and a diversified portfolio of products. However, underwriting risks remain concentrated in Mexico. El Potosí’s ERM practices are considered appropriate, integrated well into its operations, and supported by a robust reinsurance program with highly rated reinsurers.

The stable outlook reflects El Potosí’s ability to adjust its underwriting strategy to safeguard its bottom-line results and maintain the strength of its capital base.

Positive rating actions could result from further strengthening of El Potosí’s capital adequacy while maintaining robust risk-adjusted capitalization. Conversely, negative rating actions could occur if risk-adjusted capitalization deteriorates due to significant cash withdrawals or declining operating results leading to a weakened capital base.

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