ACE Seguros #A# Financial Strength And Counterparty Credit Ratings Outlook Remains Stable

Stocks and Financial Services Press Releases Tuesday December 30, 2014 09:05
MEXICO CITY--30 Dec--Standard & Poor's

MEXICO CITY (Standard & Poor's) Dec. 29, 2014, Standard & Poor's Ratings Services affirmed its 'A' financial strength and counterparty credit ratings on ACE Seguros S.A. (ACEMX) The outlook remains stable.

The rating on ACEMX reflects our view that the company is a "strategically important" subsidiary for its Swiss-domiciled parent company, ACE Ltd. (A+/Stable/--), which provides three-notch uplift to its SACP. We base the SACP assessment on ACEMX's "fair" business risk profile, due to its "adequate" competitive position, which is limited by the company's small business scale compared with its peers. The company's financial risk profile is "moderately strong," based on "moderately strong" capital and earnings and "adequate" financial flexibility.

In our view, the company is "strategically important" for its ultimate parent company given the support the parent provides to it in the form of reinsurance capacity through other group carriers. The subsidiary's brand and strategy are integrated with the parent, and we include the parent's track record of support through capital injections in our assessment. Furthermore, ACE Ltd. has targeted Latin America and Asia Pacific as key regions for business expansion; the recent acquisition of two other Mexican insurers by the group evidence this strategy.

In our view, ACEMX faces "intermediate" industry and country risk, because its activities and underwriting are based entirely in Mexico. Our Insurance Industry Country Risk Assessment (IICRA) assigns "intermediate risk" for Mexico's life and property and casualty (P/C) insurance sectors. This reflects the risk that multiline insurers operating in the country face. See Mexican Life Insurance Sector Carries An Intermediate Insurance Industry And Country Risk Assessment and Mexican Property And Casualty Insurance Sector Carries An Intermediate Industry And Country Risk Assessment, both published April 25, 2014.

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