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Rating Action:

Moody’s affirmed Mexican insurers’ ratings with stable outlooks following sovereign outlook change to negative

 The document has been translated in other languages

06 June 2019

Mexico , June 6, 2019 – Moody's de México (Moody's) affirmed the global scale ratings (GSR) and national scale ratings (NSR) insurance financial strength (IFS) ratings of 13 insurance companies in Mexico. The outlook of 12 insurers remains stable, whereas the outlook of MBIA México remains developing. Please see a complete list of companies with their ratings and outlooks below.

This portfolio-wide rating action on the Mexican insurers follows Moody's Investors Service's outlook change to negative from stable on Mexico's A3 sovereign bond ratings, and the deterioration in the country's insurance operating environment, as reflected in Moody's Investors Service's updated sovereign credit factor assessment, particularly with regards the worsening of the country's institutional strength assessment (see press release dated 05 June 2019, titled "Moody's changes Mexico's outlook to negative from stable; affirms A3 ratings").

RATINGS RATIONALE

Moody's said that the ratings' affirmation of 12 Mexican insurers, with stable outlooks, reflects that a potential downgrade of the Mexican sovereign rating would not exert significant downward pressure on the companies' credit profiles. While these insurers' direct and indirect exposure to the sovereign is relatively high, a potential downgrade on the Mexican sovereign would have a limited effect on their ratings because they are all positioned below the sovereign rating. Furthermore, Moody's notes that Mexican insurers' benefit from very modest reliance on debt funding and financing, and their liquidity positions are relatively strong, given good premium revenue streams and the relative lack of credit-sensitivity of insurance premiums. Insurers also benefit from their profitability and from the internal capital generation that derives from insurance underwriting, in addition to investment activities. These considerations broadly support rating stability of the sector.

The rating agency went on to say that the deterioration in Mexico's insurance operating environment has not created significant downward pressure on the insurers ratings because they are all comfortably positioned at their current level. That said, further deterioration in Mexico's insurance operating environment may result in rating downgrades because the country-specific trends and developments that it captures can over time have as much of a bearing on insurers' long-term credit profile and viability as the intrinsic strength of their own operations.

Moody's noted that unlike the rest of the Mexican rated insurers, Chubb Fianzas Monterrey intrinsic credit profile was negatively impacted by the deterioration in Mexico's operating environment, because its standalone fundamentals were less solidly positioned than those of its peers. That said, the company's IFS ratings remain unchanged, in recognition of a 1-notch rating uplift from its standalone credit profile, resulting from its affiliation with Chubb Limited (NYSE: CB) and Chubb Tempest Reinsurance Ltd. (IFS Aa3 positive), from which it receives support in the form of reinsurance protection, brand sharing, and oversight of the Mexican subsidiary.

The following 12 insurers' GSR and NSR IFS ratings were affirmed, and their outlooks remain stable:

- Aseguradora Aserta, S.A. de C.V., Grupo: Baa2/Aa2.mx

- Aseguradora Insurgentes, S.A. de C.V., Grupo: Baa2/Aa2.mx

- Aseguradora Patrimonial Daños, S.A.: Ba1/A1.mx

- Aserta Seguros Vida, S.A. de C.V.: Ba1/A1.mx

- Coface Seguro de Crédito México, S.A. de C.V.: Baa1/Aa1.mx

- Liberty Fianzas, S.A. de C.V.: Baa1/Aa1.mx

- Plan Seguro, S.A. de C.V., Co. de Seguros: Baa3/Aa3.mx

- Prudential Seguros México, S.A. de C.V.: Baa2/Aa2.mx

- Seguros Sura, S.A. de C.V.: Baa3/Aa3.mx

- Seguros Azteca Daños, S.A. de C.V.: Ba1/ A1.mx

- Seguros Azteca, S.A de C.V.: Ba1/A1.mx

- Chubb Fianzas Monterrey, Aseguradora de Caución S.A.: Baa1/Aa1.mx

In the case of MBIA México, Moody's said that the change in the Mexican sovereign outlook and the deterioration in its insurance operating environment does not exert any influence in the company's GLC rating, because it is well below the sovereign rating and insurance operating environment rating level. Moreover, MBIA Mexico's ratings and outlook remain closely linked to its parent, MBIA Insurance Corporation ("MBIA Corp", "Caa1 IFS, developing), given their close linkages, as reflected by brand sharing, reinsurance agreements, and through a net worth maintenance agreement from the parent.

The following insurer's IFS ratings were affirmed, with a developing outlook:

- MBIA México, S.A. de C.V: Caa1/B3.mx

Among the factors that could lead to a rating downgrade for the 12 insurers with stable outlooks are: 1) a multi-notch downgrade of the Mexican sovereign bond rating, 2) further deterioration in the country's operating environment, and 3) deterioration in companies' asset quality, profitability or its capital adequacy. Conversely, factors that could lead to an upgrade include 1) improved capital adequacy and profitability metrics for insurers, and 2) substantial and consistent improvement in companies' business profile.

In the case of MBIA Mexico, Moody's said that its ratings could be downgraded in case of 1) a downgrade of MBIA Corp. 's ratings, 2) a significant deterioration in MBIA Mexico's capital adequacy, and 3) fail to comply with minimum regulatory solvency margins. MBIA Mexico's ratings could be upgraded if MBIA Corp's ratings substantially improve.

The principal methodology used in rating, Aseguradora Aserta, S.A. de C.V., Aseguradora Insurgentes, S.A. de C.V., Aseguradora Patrimonial Danos, S.A., Chubb Fianzas Monterrey, Aseguradora de Caución S.A., Plan Seguro, S.A. de C.V., Co. de Seguros, Liberty Fianzas S.A. de C.V., Seguros Azteca Daños, S.A. de C.V., and Seguros Sura, S.A. de C.V. was Property and Casualty Insurers published in May 2018. The principal methodology used in rating Aserta Seguros Vida, S.A. de C.V., Prudential Seguros Mexico, S.A. de C.V., and Seguros Azteca, S.A de C.V. was Life Insurers published in May 2018. The principal methodology used in rating Coface Seguro de Credito Mexico, S.A. de C.V. was Trade Credit Insurers published in May 2018. The principal methodology used in rating MBIA Mexico, S.A. de C.V. was Financial Guarantors published in May 2018. Please see the Rating Methodologies page on www.moodys.com.mx for a copy of these methodologies.

The period of time covered in the financial information used to determine Aseguradora Aserta, S.A. de C.V., Aseguradora Insurgentes, S.A. de C.V., Aseguradora Patrimonial Danos, S.A., Chubb Fianzas Monterrey, Aseguradora de Caución S.A., Plan Seguro, S.A. de C.V., Co. de Seguros, Liberty Fianzas S.A. de C.V., Seguros Azteca Daños, S.A. de C.V., Seguros Sura, S.A. de C.V., Aserta Seguros Vida, S.A. de C.V., Prudential Seguros Mexico, S.A. de C.V., Seguros Azteca, S.A de C.V., Coface Seguro de Credito Mexico, S.A. de C.V., and MBIA Mexico, S.A. de C.V.'s rating is between December 2014 and December 2018 (source: CNSF and audited financial statements provided by the companies).

Moody's National Scale Credit Ratings (NSRs) are intended as relative measures of creditworthiness among debt issues and issuers within a country, enabling market participants to better differentiate relative risks. NSRs differ from Moody's global scale credit ratings in that they are not globally comparable with the full universe of Moody's rated entities, but only with NSRs for other rated debt issues and issuers within the same country. NSRs are designated by a ".nn" country modifier signifying the relevant country, as in ".za" for South Africa. For further information on Moody's approach to national scale credit ratings, please refer to Moody's Credit rating Methodology published in May 2016 entitled "Mapping National Scale Ratings from Global Scale Ratings". While NSRs have no inherent absolute meaning in terms of default risk or expected loss, a historical probability of default consistent with a given NSR can be inferred from the GSR to which it maps back at that particular point in time. For information on the historical default rates associated with different global scale rating categories over different investment horizons, please see http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1174796 .

REGULATORY DISCLOSURES

Information sources used to prepare the rating are the following: parties involved in the ratings, public information, and confidential and proprietary Moody's information.

The ratings have been disclosed to the rated entities prior to public dissemination.

A general listing of the sources of information used in the rating process, and the structure and voting process for the rating committees responsible for the assignment and monitoring of ratings can be found in the Disclosure tab in www.moodys.com.mx.

The date of the last Credit Rating Action for Aseguradora Aserta, S.A. de C.V., Grupo was 14/06/2016

The date of the last Credit Rating Action for Aseguradora Insurgentes, S.A. de C.V., Grupo was 14/06/2016

The date of the last Credit Rating Action for Aseguradora Patrimonial Danos, S.A. was 04/04/2016

The date of the last Credit Rating Action for Coface Seguro de Credito Mexico, S.A. de C.V. was 04/04/2016

The date of the last Credit Rating Action for Liberty Fianzas, S.A. de C.V. was 04/04/2016

The date of the last Credit Rating Action for Prudential Seguros Mexico, S.A. de C.V. was 04/04/2016

The date of the last Credit Rating Action for Seguros Sura, S.A. de C.V. was 04/04/2016

The date of the last Credit Rating Action for Seguros Azteca Daños, S.A. de C.V. was 13/06/2016

The date of the last Credit Rating Action for Seguros Azteca, S.A de C.V. was 13/06/2016

The date of the last Credit Rating Action for Chubb Fianzas Monterrey, Aseguradora de Caución S.A. was 04/04/2016

The date of the last Credit Rating Action for Aserta Seguros Vida, S.A. de C.V. was 29/04/2019

The date of the last Credit Rating Action for Plan Seguro, S.A. de C.V., Co. de Seguros was 08/05/2018

The date of the last Credit Rating Action for MBIA Mexico, S.A. de C.V. was 17/01/2018

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.mx.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

This rated entity or its agent(s) did not participate in the rating process. Moody's was not provided, for purposes of the rating, access to the books, records and other relevant internal documents of the rated entity.

This credit rating is subject to upgrade or downgrade based on future changes in the financial condition of the Issuer/Security, and said modifications will be made without Moody's de México S.A. de C.V accepting any liability as a result.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.

Moody's adopts all necessary measures so that the information it uses in assigning a rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see Moody's Rating Symbols and Definitions on www.moodys.com.mx for further information on the meaning of each rating category and the definition of default and recovery.

Please see ratings tab on the issuer/entity page on www.moodys.com.mx for the last rating action and the rating history. The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see our website www.moodys.com.mx for further information.

Please see www.moodys.com.mx for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

The ratings issued by Moody's de Mexico are opinions regarding the credit quality of securities and/or their issuers and not a recommendation to invest in any such security and/or issuer.

Please see the ratings tab on the issuer/entity page on www.moodys.com.mx for additional regulatory disclosures for each credit rating.

Francisco Uriostegui
Analyst
Financial Institutions Group
Moody's de Mexico S.A. de C.V
Ave. Paseo de las Palmas
No. 405 - 502
Col. Lomas de Chapultepec
Mexico, DF 11000
Mexico
JOURNALISTS : 1 888 779 5833
Client Service : 1 212 553 1653

Marc R. Pinto, CFA
MD-Financial Institutions
Financial Institutions Group
JOURNALISTS : 1 212 553 0376
Client Service : 1 212 553 1653

Releasing Office :
Moody's de Mexico S.A. de C.V
Ave. Paseo de las Palmas
No. 405 - 502
Col. Lomas de Chapultepec
Mexico, DF 11000
Mexico
JOURNALISTS : 1 888 779 5833
Client Service : 1 212 553 1653

© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

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