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AM Best Affirms Credit Ratings of BUPA México, Compañía de Seguros, S.A. de C.V.


AM Best has affirmed the Financial Strength Rating of B++ (Good), the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb+” and the Mexico National Scale Rating of “aa+.MX” of BUPA México, Compañía de Seguros, S.A. de C.V. (BUPA Mexico) (Mexico). The outlook of these Credit Ratings (ratings) remains stable.

The ratings reflect BUPA Mexico’s role as a subsidiary of Bupa Insurance Company (BIC), which on a consolidated basis has a balance sheet strength that AM Best categorizes as strongest, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management.

The ratings of BUPA Mexico also reflect its importance and integration as the Mexico subsidiary of BIC, which provides it with access to Latin America’s largest insurance market, and the operational and capital support from the ultimate parent organization, The British United Provident Association Limited (BUPA), a global health and care company. The ratings also consider the parent’s creditworthiness and the access to BUPA’s well-established network and other resources, which enhance BIC’s competitive advantage. AM Best anticipates that the operational support and financial flexibility afforded by BUPA will continue. AM Best will continue to monitor BIC’s strategic fit within the parent organization.

The ratings also reflect BUPA Mexico’s favorable financial flexibility provided by its ultimate parent and leveraged by a strong risk-adjusted capital position of the group, supported by a solid reinsurance program, as well as its experienced management team. Offsetting these positive rating factors is the subsidiary’s volatile and weak operating performance, mainly derived from its 10% retention of premium. This makes the company dependent on capital injections from its group parent to support growth and maintain adequate capital under regulatory requirements.

The subsidiary offers the same array of products as its Latin American affiliates, and adheres to BIC’s underwriting, risk management and investment policies. BUPA Mexico’s successful expansion into Mexico’s insurance market leverages the group’s global brand, reinsurance capacity and capital support provided from BIC.

BIC continues to provide capital support to BUPA Mexico and the consolidated risk-adjusted capitalization of the group remains at the strongest level, as measured by Best Capital Adequacy Ratio (BCAR), which fosters underwriting growth and provides financial flexibility. Given the subsidiary’s 10% retention of premium, the main component of required capital is derived from reinsurance recoverables. AM Best does not view this as a major concern, considering that 100% of BUPA Mexico’s reinsurance program is placed with BIC, which provides an adequate level of security. During 2H 2018, a temporary change in the quota share agreement, which was made to counter a regulatory change with respect to the probability of default for reinsurers, caused a significant decline in the risk-adjusted capitalization due to an increase in net premium risk.

BUPA Mexico’s business volume has outpaced the market for the past five years, presenting a compound average growth rate of 28.7%. BUPA Mexico has a robust reinsurance program held with BIC involving a quota share contract under which the subsidiary cedes 90% of its premiums to BIC. This is complemented by an excess of loss agreement that further protects BUPA Mexico’s risk retention.

An offsetting rating factor is the small size of the subsidiary, reflected in the small market share within the major medical expenses for individuals segment and results in volatile operating performance. In addition, BUPA Mexico historically has registered negative bottom line results, mainly as a result of elevated loss and administrative expense ratios given its low premium retention, making it more dependent on capital support from its parent. The company foresees costs stabilizing in the medium to long term.

If positive rating actions are taken on BIC, the ratings of BUPA Mexico will move in tandem. Likewise, if there are negative rating actions taken on its immediate parent as a result of a material decline in risk-adjusted capitalization, a downgrade in country risk tier in its core business markets or if strategic alignment or operational support with the ultimate parent, BUPA, changes materially, the ratings of BUPA Mexico will mirror 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 Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency and information provider with an exclusive focus on the insurance industry. Visit for more information.

Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Olga Rubo, FRM
Financial Analyst

+52 55 1102 2720, ext. 134

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Alfonso Novelo
Senior Director, Analytics
+52 55 1102 2720, ext. 107

Jim Peavy
Director, Public Relations

+1 908 439 2200, ext. 5644



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