AM Best Removes From Under Review With Positive Implications and Upgrades Credit Ratings of Insignia Life S.A. de C.V.

AM Best has removed from under review with positive implications and upgraded the Financial Strength Rating to B++ (Good) from B (Fair), the Long-Term Issuer Credit Rating to “bbb+” (Good) from “bb” (Fair) and the Mexico National Scale Rating to “aa+.MX” (Superior) from “a.MX” (Excellent) of Insignia Life S.A. de C.V. (Insignia) (Mexico). The outlook assigned to these Credit Ratings (ratings) is stable. This rating action follows the successful conclusion of the acquisition process by Grupo MAPFRE (MAPFRE).

The ratings reflect Insignia’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

On Oct. 17, 2024, MAPFRE announced that all required administrative authorizations had been obtained, and the acquisition of 94.5% of the share capital of Proyecto Insignia, S.A.P.I. DE C.V. (PIN), the holding company of Insignia, had been completed. The price of the transaction includes an initial payment that amounted to MXN 1.6 billion pesos, as well as an additional variable payment, dependent on the fulfillment of targets by Insignia over the next three years.

As part of the agreement, PIN’s debt derived from a bank loan has been liquidated fully, thus eliminating the financial leverage at the holding company level, alleviating AM Best’s concerns regarding PIN’s financial situation and its potential effects on Insignia’s financial strength, relieving the pressure on Insignia’s ratings.

The stable outlooks reflect Insignia’s ability to maintain a stable operation that benefits from increased operational flexibility and relief of the previous financial pressure at the holding company level after the successful acquisition by the MAPFRE.

Insignia was established in Mexico City in 2008, as a life insurance company that underwrites individual and group life through a commercial network of more than 3,000 agents and 10 offices distributed throughout Mexico. Insignia ranks within the top 20 companies within the life segment in the country, with a market share of less than 1% as of June 2024.

Insignia’s balance sheet strength assessment reflects the stabilization of its risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), with scores at the strongest level for 2023 and 2022. The very strong assessment also reflects the elimination of potential strain in Insignia’s balance sheet, derived from debt servicing, as the sole source of revenue for PIN.

Insignia has improved its performance and recovered from COVID-19 losses, achieving positive bottom-line results in 2023 and 2022. Profitability has been backed by investment income, as the company’s investment strategy continues to be conservative and provides a steady flow of revenue to back its underwriting results.

Negative rating actions will take place if underwriting quality and bottom-line results deteriorate to a point where they are no longer supportive of the adequate assessment. Positive rating actions could take place if the change in ownership results in significant support from the MAPFRE Group.

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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