AM Best Revises Issuer Credit Rating Outlook to Positive for Berkley International Fianzas Mexico S.A.

AM Best has revised the outlook to positive from stable for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of A+ (Superior), the Long-Term ICR of “aa-” (Superior) and the Mexico National Scale Rating (NSR) of “aaa.MX” (Exceptional) of Berkley International Fianzas Mexico S.A. (BFM) (Mexico City, Mexico). The outlook of the FSR and NSR is stable.

BFM is a member of W. R. Berkley Insurance Group (Berkley Group), which on a consolidated basis has a balance sheet strength that AM Best assesses as strongest, as well as strong operating performance, a favorable business profile and appropriate enterprise risk management (ERM).

The Credit Ratings (ratings) reflect BFM’s integration with its parent company, W. R. Berkley Corporation (W. R. Berkley), in terms of corporate goals, underwriting, ERM and capital commitments, as well as the substantial reinsurance support from its group through the Berkley Insurance Company.

BFM was formed in November 2016, and is the Mexico surety subsidiary of W. R. Berkley. The company received regulatory approval for operations in June 2017 and issued its first policy that same month. The company offers a mix of administrative surety and a lesser portion of credit and judicial products mainly backed by a comprehensive reinsurance contract with its parent company.

BFM’s strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is derived from its strong capital position, strengthened further by the comprehensive reinsurance contract with its parent company and a growing capital base due to reinvestment of earnings. Furthermore, AM Best recognizes W. R. Berkley’s commitment to its subsidiaries providing additional capital fungibility to the Mexico operation.

BFM has been able to grow it business volume during the past seven years; during 2023, BFM presented significant premium growth, taking advantage of the increased construction activity from government projects like the Tren Maya and Dos Bocas Refinery, as well as the surge in industrial activity in northern Mexico, mainly driven by nearshoring. BFM’s experienced underwriting team is expected to use its capabilities to continue providing resources that further develop the company’s business base. The company takes advantage of the reinsurance support received from the Berkley Group, which has allowed BFM to achieve premium sufficiency, and further strengthen profitability through investment income.

If positive rating actions are taken due to the Berkley Group’s operating performance showing continued and sustained outperformance of the “strong” composite and peer benchmarks, BFMs ratings would mirror those actions.

Negative rating actions could occur to the insurance operations of the Berkley Group if the financial position of the ultimate parent were to weaken, requiring the withdrawal of capital from the various insurance companies or an increase in financial leverage and/or a decline in interest coverage that is not supportive of the current ratings, BFM’s ratings would reflect those actions.

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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