Fitch Affirms Seguros Inbursa at 'BBB' and 'AAA(mex)'; Outlook Stable

  Fitch Affirms Seguros Inbursa at 'BBB' and 'AAA(mex)'; Outlook Stable

Business Wire

MONTERREY, Mexico -- December 05, 2012

Fitch Ratings has affirmed Seguros Inbursa's Local Currency Insurer Financial
Strength (IFS) rating at 'BBB' with a Stable Outlook. Fitch has also affirmed
Seguros Inbursa's Local Currency National Scale IFS rating at 'AAA(mex)' with
a Stable Outlook.

Fitch's rating action reflects the company's strong competitive position
mainly in the Auto and P&C market, solid financial profitability, large
reserves coverage, reasonable capital structure and conservative reinsurance
protection with low equity exposure to severity losses. The ratings also
reflect the company's clients concentration, generated by its larger insurance
policy.

Seguros Inbursa (Inbursa) is among the leading insurance companies in Mexico
in terms of premiums written (The fifth largest in Dec. 31, 2011). In 2011
Inbursa benefited from the underwriting, for a 24-month period, of the
Mexico's largest P&C policy (Pemex), which represents around 30% of the
company's total written premiums.

The underwriting of the Pemex policy has enabled the company to reach
important premium volumes and high efficiency levels over the years that
affect the company's balance sheet; this has no impact on the company's income
statement as it retains only 5% of the policy.

The rating actions also reflect Inbursa's very conservative reserving
approach, which is partly driven by the stringent requirements set under
Mexican insurance regulation. Total Reserves to NRP ratio stood at 269.7% in
1H'12 (December 11: 322.8%), whereas catastrophic reserves alone amounted to
US$477 million, which represents 137 times the priority set in the current
catastrophic reinsurance contract.

The ample amount of accumulated reserves allows the company to have a broad
base of resources available for investment, which translates into an important
net financial income contribution (21.4% of NEP in 1Q'12).

Fitch rating actions are also based on Inbursa's signing of a conservative
reinsurance program. Through this reinsurance scheme, Inbursa has catastrophic
reinsurance protection of US$ 550 million, and the possible maximum retained
loss in any kind of event could only reach a low 0.7% of company's total
equity, excluding Pemex policy in which retained losses can reach 4%.

Based on Fitch's own calculations, Inbursa's capital structure is within
acceptable levels for the current rating category. At end 1Q'12 Inbursa's
operating leverage was 1.8x (1.9x in Dec.11) and financial leverage
(liabilities to capital) reached 6.0x (6.9x on December 11). However, leverage
ratios are mostly influenced by the company's large catastrophic reserves
accumulation.

A reduction in leverage levels or a significant increase in liquidity
position, business diversification and profitability margins, could lead to a
positive rating action. On the other hand, Inbursa's ratings may be downgraded
if the liquidity and the capital position fall considerably below current
levels, and if loss and combines ratios increase significantly.

Additional information is available at 'www.fitchratings.com. The ratings
above were solicited by, or on behalf of, the issuer, and therefore, Fitch has
been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Insurance Rating Methodology - Global Master Criteria' (Oct. 18 2012).

Applicable Criteria and Related Research:

Insurance Rating Methodology -- Amended

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=692293

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Contact:

Fitch Ratings
Primary Analyst
Alejandro Garcia
Senior Director
+52-81-8399-9100 x146
Monterrey, Mexico
or
Secondary Analyst
Eduardo Recinos
Senior Director
+503-2516-6606
San Salvador, El Salvador
or
Committee Chairperson
Julie Burke
Managing Director
+1-312-368-3158
or
Media Relations:
Elizabeth Fogerty, +1-212-908-0526 (New York)
elizabeth.fogerty@fitchratings.com
 
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