GRUPO NACIONAL PROVINCIAL, S.A.B.
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 of 'aaa.MX' (Exceptional) of
The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect GNP's balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management.
GNP is the largest insurer in
Dividend payments, driven by the company's targets on capital efficiency, have partially restricted AM Best's view of GNP's risk-adjusted capitalization in the past, as measured by Best's Capital Adequacy Ratio (BCAR). However, in recent years, GNP's balance sheet strength has been very strong, having benefited from additional equity surplus due to changes in statutory accounting at year-end 2016, and positive bottom-line results during 2016-2020.
The additional equity surplus is a consequence of GNP implementing accounting measures based on market value approximations of assets and liabilities. GNP follows conservative practices in terms of its asset-liability management. In addition, the company's balance sheet strength is reinforced by its good reinsurance program placed with highly rated counterparties, which protects the company's risk retention adequately.
In 2020, GNP reported 7.2% growth in GPW, while maintaining profitable business in most of its core segments. Group life (6% of GPW) was the company's only business line that generated a negative bottom line result. Overall, the company's underwriting performance metrics were in line with historical trends, benefitting from a consistent flow of investment income. Policies were aligned to market changes, and the pricing model was improved to gain competitiveness and market share in low risk areas. As of
Positive rating actions are not expected in the medium term. Negative rating actions could take place if the company's additional equity erodes with a sustained negative operating performance, or if the amount of dividends paid negatively impacts the company's risk-adjusted capitalization to a level that is no longer supportive of the current rating levels.
The methodology used in determining these ratings is Best's Credit Rating Methodology (Version
Key insurance criteria reports utilized:
Evaluating Country Risk (Version
Understanding Global BCAR (Version
Catastrophe Analysis in A.M. Best Ratings (Version
Available Capital & Holding Company Analysis (Version
Scoring and Assessing Innovation (Version
View a general description of the policies and procedures used to determine credit ratings. For information on the meaning of ratings, structure, voting and the committee process for determining the ratings and monitoring activities, please refer to Guide to Best's Credit Ratings.
Previous Rating Date:
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