Six Insurers Operating in Mexico Downgraded After Similar Action On The Sovereign; Negative Outlook On Eight Insurers

  • On March 26, 2020, we lowered our local and foreign currency ratings on Mexico to 'BBB+' from 'A-' and to 'BBB' from 'BBB+', respectively. We expect a pronounced hit to the Mexican economy following the combined shocks of the impact of COVID-19 in both Mexico and the U.S., and lower global oil prices.
  • As a result, we lowered the global scale ratings on five Mexican insurers because the sovereign rating limits the ratings on these entities. Additionally, we downgraded PEMEX's Swiss-based captive reinsurer, Kot Insurance, in line with the parent rating in local currency, which also reflects that on the sovereign.
  • We affirmed our ratings on TMX and AIGMX because in our view, the sovereign does not constrain these ratings. TMX's financial strength rating is supported by an irrevocable and unconditional guarantee provided by the Japanese parent, Tokio Marine Nichido and Fire Insurance Co. Ltd. (TMNF). AIGMX passes our stress test scenario for rating an entity above the sovereign given its robust cash position and low exposure to sovereign bonds.
  • We affirmed our 'mxAAA' national scale ratings on AIGMX, AZMX, Axa Seguros, ChubbMX, GNP, and TMX.
  • The downgraded entities have a negative global scale outlook and a stable national scale outlook. The outlooks are aligned with that on Mexico for both rating scales.
MEXICO CITY (S&P Global Ratings) March 27, 2020--S&P Global Ratings lowered its ratings on the following entities by one notch, in line with our downgrade of Mexico:
  • AXA Seguros S.A. de C.V. (AXA Seguros) and SOMPO Seguros Mexico, S.A. de C.V. (Sompo Mexico) to 'A-' from 'A';
  • Chubb Seguros Mexico S.A. (ChubbMX) to 'BBB+' from 'A-'; and
  • Allianz Mexico Compania de Seguros S.A. (AZMX), and Grupo Nacional Provincial S.A.B. (GNP) to 'BBB' from 'BBB+'.
We also downgraded Kot Insurance Co. A.G. (Kot) to 'BBB+' from 'A-' following our downgrade of Petroleos Mexicanos on local currency (PEMEX: local currency BBB+/Stable/--; foreign currency BBB/Negative/--). The outlook on these entities is negative, in line with that on Mexico.
We affirmed our ratings on Qualitas Controladora S.A.B. de C.V. (QualColown) and its U.S.-based subsidiary Qualitas Insurance Co. (QIC) at 'BB+ and 'BBB-', respectively, and revised their outlook to negative from positive following the sovereign downgrade.
We also affirmed our 'A+' rating on Tokio Marine Compania de Seguros S.A. de C.V. (TMX) and our 'A-' rating on AIG Seguros Mexico, S.A. de C.V. (AIGMX) to reflect that the sovereign rating does not immediately constrain their ratings. The outlook on TMX remains positive and the outlook on AIG stable.
Finally, we affirmed our 'mxAAA' national scale ratings on AIGMX, AZMX, Axa Seguros, ChubbMX, GNP, and TMX with stable outlooks.
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