AM Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of 'a-' (Excellent) of Virginia Surety Seguros de Mexico S.A. de C.V. (VSSM) (Mexico City, Mexico).

AM Best also has affirmed the Mexico National Scale Rating (NSR) of 'aaa.MX' (Exceptional) of VSSM. The outlook of the NSR is stable.

These Credit Ratings (ratings) reflect VSSM's balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

The revision of the FSR and Long-Term ICR outlooks to positive reflects the company's consistent reinforcement of its strong level of balance sheet strength while maintaining the strongest level of risk-adjusted capitalization on a consolidated basis, as measured by Best's Capital Adequacy Ratio (BCAR), underpinned by positive bottom-line results in conjunction with strategies to become more efficient.

The company's balance sheet strength has been assessed at a strong level since it began operations in Mexico. The ratings of VSSM also factor its recent affiliation and strategic importance to Assurant, Inc., the ultimate parent, as well as its risk-adjusted capitalization at the strongest level, as measured by BCAR.

VSSM is a subsidiary of Virginia Surety Company, Inc., a general underwriting entity part of The Warranty Group, Inc. In 2017, The Warranty Group, Inc. completed a merger agreement with Assurant, Inc., with the purpose of combining insurance operations in various jurisdictions, including the operation in Mexico. VSSM started operations in Mexico in January 2017, underwriting premiums in the property/casualty segment, focused in the auto insurance line of business and other miscellaneous business lines.

VSSM underwrites specialty products, providing coverage for risks that usually are not underwritten in the traditional automobile insurance. In its miscellaneous lines of business, VSSM mainly offers coverage in case of theft or accidental damage for consumer technology products, such as cellphones, photographic and sound equipment and home appliances. VSSM places its coverage products through its network of business partners, which include manufacturers, distributors and retailers.

VSSM operates under the same management as Assurant Danos Mexico, S.A. and Assurant Vida Mexico, S.A., subsidiaries of Assurant Inc. These companies operate separately but do not compete against each other; moreover, VSSM takes advantage of the operational synergies derived from being part of the Assurant Group.

Factors that could lead to positive rating actions for VSSM include a sustained reinforcement of its strong balance sheet strength underpinned by risk-adjusted capitalization at the strongest level, as measured by BCAR, and favorable results in operating performance. Conversely, negative rating actions could take place if operating performance substantially deteriorates, resulting in a decline in risk-adjusted capitalization to a level no longer supportive of the current ratings.

Negative rating actions also could occur if the subsidiaries' parental support or its strategic importance to the group deteriorates in AM Best's view.

The methodology used in determining these ratings is Best's Credit Rating Methodology (Version Nov. 13, 2020), which provides a comprehensive explanation of AM Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Key insurance criteria reports utilized:

AM Best Ratings On a National Scale (Version Oct. 13, 2017)

Available Capital and Holding Company Analysis (Version Oct. 13, 2017)

Evaluating Country Risk (Version Oct. 13, 2017)

Understanding Global BCAR (Version July 22, 2021)

Scoring and Assessing Innovation (Version March 5, 2020)

Rating New Company Formations (Version Oct. 13, 2017)

View a general description of the policies and procedures used to determine credit ratings. For information on the meaning of ratings, structure, voting and the committee process for determining the ratings and monitoring activities, please refer to Guide to Best's Credit Ratings.

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