AM Best has upgraded the Financial Strength Rating to B- (Fair) from C++ (Marginal), the Long-Term Issuer Credit Rating to “bb-” (Fair) from “b+” (Marginal), and the Mexico National Scale Rating to “a-.MX” (Excellent) from “bbb.MX” (Good) of BUPA México, Compañía de Seguros, S.A. de C.V. (Bupa Mexico) (Mexico). The outlook of these Credit Ratings (ratings) is positive. Concurrently, AM Best has withdrawn these public ratings of Bupa Mexico per the company’s request.

The ratings reflect Bupa Mexico’s balance sheet strength, which AM Best assesses as weak, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

The rating upgrades and positive outlooks reflect sustained improvement in the company’s balance sheet strength, underpinned by risk-adjusted capitalization supportive of the adequate level, as measured by Best´s Capital Adequacy Ratio (BCAR), following the previous change in its reinsurance program, and fully retained quality business.

Bupa Mexico is a subsidiary of The British United Provident Association Limited and is tied to the Bupa group’s commercial strategy of expanding into Mexico’s insurance market by leveraging its brand. Bupa Mexico’s focus is on the individual and group major medical coverage segment, while the individual lines segment represents its biggest share of business, at approximately 90%. The company’s target market has been small clients with high net worth; however, it has diversified by opening coverage to other sectors, with a higher volume of lower premium business.

The company’s historically favorable financial flexibility was achieved through the capital and reinsurance support historically provided by its ultimate parent. Beginning in third-quarter 2021, changes in the Mexico-based subsidiary’s reinsurance program significantly raised its underwriting risk, pressuring its BCAR. Nonetheless, the company’s flagship business, which previously was ceded for the most part, historically has demonstrated operating performance in line with industry benchmarks, enhancing the company’s balance sheet strength assessment.

Bupa Mexico’s business volume has outpaced the market for the past five years, resulting in a compound annual growth rate of 12%. However, an offsetting rating factor is the small size of the subsidiary, reflected in a market share of over 3% (as of December 2023) in an industry led by bigger participants. As of September 2024, Bupa Mexico posted a positive bottom-line result of MXN 155.4 million, which was mainly a result of contained claims, as well as its internal service team, which includes synergies between areas of customer service and a core business system. The company also has continued to reduce operating expenses; however, a challenging and concentrated operating environment raises uncertainty and could affect new business strategy.

Positive rating actions could occur as a result of sustained improvement in Bupa Mexico’s balance sheet strength underpinned by risk-adjusted capitalization above the adequate level. Negative rating actions could occur if the strategic importance of the company to Bupa group decreases, which could diminish AM Best’s opinion of parental support toward the Mexico-based subsidiary. Negative rating actions could also take place if balance sheet strength deteriorates to levels no longer supportive of the ratings.

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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