TEXT-Fitch affirms Seguros Inbursa at 'BBB', 'AAA(mex)'

Wed Dec 5, 2012 11:47am EST

Dec 5 - Fitch Ratings has affirmed Seguros Inbursa's Local Currency Insurer
Financial Strength (IFS) rating at 'BBB' with a Stable Outlook. Fitch has also
affirmed Seguros Inbursa's Local Currency National Scale IFS rating at
'AAA(mex)' with a Stable Outlook.

Fitch's rating action reflects the company's strong competitive position mainly
in the Auto and P&C market, solid financial profitability, large reserves
coverage, reasonable capital structure and conservative reinsurance protection
with low equity exposure to severity losses. The ratings also reflect the
company's clients concentration, generated by its larger insurance policy.

Seguros Inbursa (Inbursa) is among the leading insurance companies in Mexico in
terms of premiums written (The fifth largest in Dec. 31, 2011). In 2011 Inbursa
benefited from the underwriting, for a 24-month period, of the Mexico's largest
P&C policy (Pemex), which represents around 30% of the company's total written
premiums.

The underwriting of the Pemex policy has enabled the company to reach important
premium volumes and high efficiency levels over the years that affect the
company's balance sheet; this has no impact on the company's income statement as
it retains only 5% of the policy.

The rating actions also reflect Inbursa's very conservative reserving approach,
which is partly driven by the stringent requirements set under Mexican insurance
regulation. Total Reserves to NRP ratio stood at 269.7% in 1H'12 (December 11:
322.8%), whereas catastrophic reserves alone amounted to US$477 million, which
represents 137 times the priority set in the current catastrophic reinsurance
contract.

The ample amount of accumulated reserves allows the company to have a broad base
of resources available for investment, which translates into an important net
financial income contribution (21.4% of NEP in 1Q'12).

Fitch rating actions are also based on Inbursa's signing of a conservative
reinsurance program. Through this reinsurance scheme, Inbursa has catastrophic
reinsurance protection of US$ 550 million, and the possible maximum retained
loss in any kind of event could only reach a low 0.7% of company's total equity,
excluding Pemex policy in which retained losses can reach 4%.

Based on Fitch's own calculations, Inbursa's capital structure is within
acceptable levels for the current rating category. At end 1Q'12 Inbursa's
operating leverage was 1.8x (1.9x in Dec.11) and financial leverage (liabilities
to capital) reached 6.0x (6.9x on December 11). However, leverage ratios are
mostly influenced by the company's large catastrophic reserves accumulation.

A reduction in leverage levels or a significant increase in liquidity position,
business diversification and profitability margins, could lead to a positive
rating action. On the other hand, Inbursa's ratings may be downgraded if the
liquidity and the capital position fall considerably below current levels, and
if loss and combines ratios increase significantly.

Additional information is available at 'www.fitchratings.com. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been
compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Insurance Rating Methodology - Global Master Criteria' (Oct. 18 2012).

Applicable Criteria and Related Research:
Insurance Rating Methodology - Amended
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