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-” (Excellent) and the Mexico National Scale Rating (NSR) of “aaa.MX” (Exceptional) of General de Salud, Compañía de Seguros, S.A. (Gsalud) (Mexico City, Mexico). The outlook of these Credit Ratings (ratings) is negative.

The ratings reflect Gsalud’s balance sheet strength, which AM Best assesses 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 its risk-adjusted capitalization at the strong level, as measured by Best’s Capital Adequacy Ratio (BCAR). 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 is 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. (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 strong level of risk-adjusted capitalization, as measured by BCAR, is expected to be strengthened in the following years due to the exercise of a capital contribution of MXN 50 million in the first half of 2024, and an already approved additional contribution for the same amount that will be performed during the last quarter of the year. 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. However, since 2021, the combined ratios have stood above the 100% threshold, influenced by high loss ratios, producing negative bottom-line results. Gsalud deployed a strategy in 2024 focused on recovering profitability by strengthening underwriting, containing claims and enhancing business operations. As of September 2024, the company has achieved premium sufficiency levels driven by significant revenue from ceded premium commission, and positive net income reinforced by investment income. Additionally, AM Best will continue to monitor the relevance of investment income for the company’s net result.

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 continues with its comprehensive transformation project, which includes implementing 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 market scope.

The negative outlooks reflect Gsalud’s recent negative trend in operating performance, despite the company’s efforts to improve its underwriting.

Negative rating actions could take place if the negative trend in operating performance is not reversed by Gsalud’s efforts to improve underwriting or by any deterioration in risk-adjusted capitalization either by higher risk undertakings or depletion of its capital base. Conversely, positive rating actions are not expected in the medium term; however, the balance sheet assessment could benefit from a revised risk appetite and growing capital base.

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 Performance Assessments, 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.

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