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A.M. Best Revises Outlooks to Positive for General de Salud Compañía de Seguros S.A.A.M. Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of "bbb+" to General de Salud Compañía de Seguros S.A. (Gsalud) (Mexico City, Mexico). The outlook revisions to positive follow Gsalud's improved profitability metrics in 2016, which have further reinforced the company´s capitalization. The ratings reflect Gsalud's strong risk-based capitalization as well as operating performance and supportive reinsurance program. Historically, Gsalud has been able to increase capital and achieve favorable results based on its consistent underwriting profit. Offsetting these positive rating factors are Gsalud's concentration in one business line and the highly competitive health insurance market. Gsalud is a fully owned subsidiary of General de Seguros, S.A.B. (General de Seguros) and focused solely on health insurance. The company provides products mainly in the individual and collective health segments, as well as for major medical expenses. Gsalud has used the same distribution channels as General de Seguros, which involves agents, brokers and commercial offices. Based on Best's Capital Adequacy Ratio (BCAR), Gsalud's capitalization is strong and supportive of the ratings. The subsidiary is mainly susceptible to underwriting risk as it retains almost 100% of its premiums. Historically, the company's strong underwriting practices have resulted in positive technical performance with no dependence on investment revenue to achieve positive bottom line. A.M. Best expects the company to sustain this trend. In 2016, underwriting results driven by a decrease in claims coupled with positive effects, such as reserves release derived from the implementation of Solvency II-type regulation, further improved profitability as reflected in a 32.9% return on equity. The company's investment policies are conservative, providing a steady flow of revenue to support its positive operating results. Moreover, the company benefits from being integrated into the Peña Verde, S.A.B. group, gaining operational leverage through common systems, procedures and enterprise risk management practices. A.M. Best expects underwriting results to further reinforce the company's operating performance and thus capitalization levels. Factors that may trigger positive rating actions include a continued generation of underwriting earnings that strengthen risk-adjusted capitalization levels. The company's current ratings could come under pressure should a lack of underwriting discipline result in overall profitability falling short of expectations or if capitalization is no longer supportive of the current ratings. The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology. Key insurance criteria reports utilized:
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 Understanding Best's Credit Ratings.
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