AM Best Affirms Credit Ratings of Quálitas Compañía de Seguros S.A.B. de C.V.


MEXICO CITY–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of B+ (Good),
the Long-Term Issuer Credit Rating of “bbb-” and the Mexico National
Scale Rating of “aa-.MX” of Quálitas Compañía de Seguros S.A.B. de C.V.
(Quálitas) (Mexico City, Mexico). The outlook of these Credit Ratings
(rating) is stable.

The ratings reflect Quálitas´ balance sheet strength, which AM Best
categorizes as adequate, as well as its strong operating performance,
neutral business profile and appropriate enterprise risk management.

Quálitas’ balance sheet strength is underpinned by risk-adjusted
capitalization being at the strong level, as measured by Best’s Capital
Adequacy Ratio (BCAR), sustained premium sufficiency and profitability
metrics, the company’s consistent leading position in the auto insurance
segment and its strong distribution network. Partially offsetting these
positive rating factors are the company’s concentration in one business
line and elevated underwriting leverage, which has shown improvement.

Quálitas has established a strong distribution capability across Mexico
through its network of local agents, financial institutions and service
offices. This has enabled the company to maintain its leading market
position in Mexico’s auto insurance segment and achieve a 29.9% market
share amid challenging competitive conditions.

Quálitas’ capital base has strengthened over time as a result of its
sound underwriting performance, reflected in the 18.8% compound annual
growth rate of its capital over the past five years. In 2017 and 2018,
Quálitas managed to sustain profitability through underwriting backed by
investment results, enabling the company to generate a return on equity
of 35.4%, despite adverse market conditions driven by the auto sales
slowdown, increased burglary rates and weather-related events.

Historically, the company has operated with higher than expected
underwriting leverage for an auto insurance provider. However, by the
end of 2018, the company’s underwriting leverage, as measured by the
ratio of net premiums written to capital, decreased from 5.1 to 4.5
times, mainly driven by increased reinvestment of earnings and premium
growth in line with the market pace. AM Best expects Quálitas´ dividend
policy and growth targets to continue supporting current underwriting
leverage trends.

Key rating drivers that could lead to positive rating actions for
Quálitas include a sustained market-leading position along with
continued favorable trends in risk-adjusted capitalization supported by
positive technical results and an adequate reinvestment of profits. Key
factors that could lead to negative rating actions include a sharp
deterioration in its risk-adjusted capitalization to levels no longer
supportive of the current ratings, whether derived from a substantial
decline in profitability, aggressive dividend policy or strong growth in
premiums without an appropriate capital support.

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
Rating Activity
web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view
Best’s Credit Ratings
. For information on the proper media
use of Best’s Credit Ratings and AM Best press releases, please view
for Media – Proper Use of Best’s Credit Ratings and AM Best Rating
Action Press Releases

AM Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit
for more information.

Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its


Salvador Smith
Financial Analyst
+52 55 1102
2720, ext. 109


Alfonso Novelo
Senior Director, Analytics
55 1102 2720, ext. 107


Christopher Sharkey
Manager, Public Relations
908 439 2200, ext. 5159


Jim Peavy
Director, Public Relations
+1 908
439 2200, ext. 5644



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