OREANDA-NEWS. Fitch Ratings has affirmed Seguros Inbursa, S.A. Grupo Financiero Inbursa's local currency Insurer Financial Strength (IFS) rating at 'BBB+' and affirmed the National Scale IFS rating at 'AAA(mex)'. The Outlook for both ratings remains Stable.

KEY RATING DRIVERS

The rating of Seguros Inbursa, S.A. (Seguros Inbursa) is based on the legal explicit support given by its holding group Grupo Financiero Inbursa (GFInbursa), under which, according to the law that rules Financial Groups, the holding company, if required, will grant unlimited support for its subsidiaries losses. Fitch considers GFInbursa's credit quality to be similar to that of its main subsidiary: Banco Inbursa, S.A., Institucion de Banca Multiple (BInbursa), which is rated 'BBB+'/Stable Outlook by Fitch.

Inbursa holds a strong competitive position and remains among the five largest insurers in Mexico, with a market share of 5% as of September 2015. While written premium growth was negative (-2.9% Sept-2015), affected mainly by low retention businesses that were not renewed in the transport business line, net written premiums grew 8.3% driven by good growth in auto and personal life (+7% and +22%, respectively, as of Sept-2015) as a result of commercial synergies with other Group operating companies. Fitch expects stable growth coming from this strategy, which is a key feature of the insurer's robust competitive position.

Inbursa's capital position continued to be sound, providing a strong cushion against the risks faced by the insurer. As of September 2015, company's equity reached MXP$9.415 million and it has maintained a modest growth rate (+2.2% Sept-2015; average 2014-2013: 3.2%). Capital metrics remain stable with an operating leverage ratio (retained premiums/equity) of 1.3x, which is well below the sector's two-year average of 2.3x. Fitch expects the favorable internal capital generation to continue playing a key role in the insurer's good solvency and balance sheet robustness, and to leverage the insurer's future growth plans.

Operating profitability continued to show a positive trend and combined ratio decreased to 105.4% as of Sept-2015 (108.7% Dec-2014; 113.1% Sept-2014), normalizing from the losses caused by Odile Hurricane. Fitch believes this positive trend is related to good performance on claims ratios and relative stability in operational costs and expenses with greater economies of scale.

Despite good technical results, net profitability ratios were lower (ROAA: 0.7% Sept-2015; 1.7% Dec-2014; ROAE: 5.9% Sept-2015; 12.4% Dec-2014) due to reduced investment revenues, which are likely to remain under pressure due to uncertainty in financial markets and stresses the importance of a profitable insurance operation.

The company's stringent technical and catastrophic provisioning policies, combined with the breakdown and retention levels of the company's premium portfolio, led to ample coverage of technical reserves over retained risks (2.96x) as of September 2015, which is in line with the sector's average of 3.1x.

RATING SENSITIVITIES
Seguros Inbursa's rating is aligned with GFInbursa's financial profile, whose credit quality is considered by Fitch as similar to its core operative subsidiary, BInbursa, based on the legal explicit support given by GFInbursa through their Unique Responsibilities Agreement.

Fitch affirms the following ratings:

Seguros Inbursa, S.A., Grupo Financiero Inbursa
--Insurer Financial Strength at 'BBB+';
--National IFS at 'AAA(mex)'.