KEY RATING DRIVERS
Afianzadora Aserta is a subsidiary of
Aserta is the third-largest of a total of 15 Mexican surety bond companies, boasting a market share of 18% as of
While the company's leverage metrics are slightly higher than the sector's local and regional averages, Fitch believes that these are adequate, as the pressure on capital is generated by Mexican regulations on reserves constitution, as well as the Group's generous dividend policy.
The company's efficiency levels, measured through its operating (59%) and loss ratios (20%), have remained stable and competitive as of June'16, although results have been pressured by administrative expenses. Risk cumulus remain under control, representing 68% of the capital by group, and only 11% by surety bond, being mitigated through reinsurance contracts.
With a five-year average of 52.8%, the proportion of Aserta's investments held in government instruments is similar to the sector's 57.9%. The investments backing reserves comprise government instruments (82.4%) and shares (17.6%) of adequate credit quality.
Aserta's reserves to earned premiums ratio are in line with the local average but greater than the regional average, due to stricter regulatory requirements in
The company's reinsurance program is ample and includes contracts with companies of high credit quality, as well as with its sister company. The company's maximum loss retention for its product with the greatest market share represents 11.2% of its equity per event. However, it compares similar to the regional average for the sector.
An improvement in Aserta's rating would be associated with lower leverage ratios and lower equity exposures, along with adequate and ample profitability ratios sustained over time. Furthermore, a downgrade would be triggered by higher leverage ratios and a sustained deterioration in the company's technical profitability. Likewise, an upgrade or downgrade of Aserta's ratings would be triggered by a change in Fitch's perception of GFAserta's credit quality, which is driven by the two surety bond companies that make up the group.
Date of Relevant Rating Committee:
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