AM Best Affirms Credit Ratings of Atradius Seguros de Crédito, S.A.

AM Best has affirmed the Financial Strength Rating of A (Excellent), the Long-Term Issuer Credit Rating of “a+” (Excellent) and the Mexico National Scale Rating of “aaa.MX” (Exceptional) of Atradius Seguros de Crédito, S.A. (Atradius Mexico) (Mexico City, Mexico). The outlook of these Credit Ratings (ratings) is stable.

Atradius Mexico is a member of the Atradius group, which on a consolidated basis has a balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management (ERM).

The ratings reflect Atradius Mexico’s strategic importance to the overall Atradius group, given its leading position within Mexico’s credit insurance segment, its importance as a gateway to Latin America’s insurance markets, good financial flexibility derived from its strong capitalization, supportive reinsurance provided by the group, and its seasoned management team. These positive rating factors are offset partially by volatility in the company’s net income due to the intrinsic volatility in the credit insurance market.

The company benefits from its integration within the Atradius group, which allows it to leverage operations on the same practices and procedures, reinsurance, draft facilities and underwriting selection. In addition, its ERM practices show a high level of integration to Atradius N.V.

Atradius Mexico offers credit insurance in its domestic market and was ranked as Mexico’s largest credit insurer as of 2020. The three largest participants in this line of business hold more than 90% of the market share.

Even though the company’s bottom line was pressured historically by an unrealized capital loss and material claims increase during 2018-2019, Atradius Mexico’s financial performance was enhanced significantly in 2020, driven by fine-tuning of underwriting and collection practices amid the pandemic environment. The company’s continued profitability was reflected in a combined ratio of 92.4% and a return on equity of 6.2% as of year-end 2020, comparing favorably with its peers in Mexico’s credit insurance industry. AM Best expects Atradius Mexico’s profitability to continue and rely mainly on the company’s sound underwriting and expense control practices, as well as the high amount of commissions received by reinsurance that translate into negative acquisition costs and its consistent financial product, which leverages on the company’s long position in U.S. dollars.

Atradius Mexico’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR) on a consolidated basis, was maintained at the strongest level, and as a result, the company maintains significant financial flexibility. Furthermore, AM Best expects the company to sustain its capitalization level. Atradius Mexico’s reinsurance program is placed with Atradius Reinsurance Designated Activity Company, further demonstrating the support received by the group.

If there are positive rating actions taken on the main operating subsidiaries of Atradius N.V., as a result of a change in the key rating fundamentals of Atradius N.V.’s parent company, Grupo Catalana Occidente S.A., Atradius Mexico’s ratings likely would move in tandem. Likewise, if there are negative rating actions taken on the Atradius group, as a result of a sustained decline in operating performance or a sustained and material deterioration in Atradius N.V.’s consolidated risk-adjusted capitalization, Atradius Mexico’s ratings would mirror those same rating actions.

A change in AM Best’s perception regarding the actual or perceived level of strategic importance of Atradius Mexico to the Atradius group of companies also could impact the company’s ratings.

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 use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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

Copyright © 2021 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Salvador Smith
Senior Financial Analyst
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Eli Sanchez
Associate Director, Analytics
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Christopher Sharkey
Manager, Public Relations
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Jim Peavy
Director, Communications
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