News Column

A.M. Best Special Report: Dividends Affecting Capitalization Levels in Mexico’s Insurance Market

August 13, 2014

MEXICO CITY--(BUSINESS WIRE)-- An increasing volume of shareholder dividends is the main driver behind a reduction in the overall capitalization of Mexico’s insurance industry, according to a new Best’s Special Report.

The report, titled "Dividends Affecting Capitalization Levels in Mexico’s Insurance Market," is based on an A.M. Best analysis of Mexico’s 103 insurance companies, with the exception of nine pension and annuity companies that held a 5% market share as of March 2014. The results showed a negative trend in terms of capitalization for the industry over the past five years. Even though the competitive environment has pressured underwriting results, and the low interest rate environment has negatively affected the industry’s revenues, the industry’s profitability remains strong and fairly stable for respective market segments. As a result, the industry’s profitability is not considered a driver for the deterioration in capitalization.

The analysis was done in advance of Mexico’s insurance sector moving toward a new Solvency II-type regulatory scheme, which will be implemented in April 2015. “The new regulatory capitalization requirements, while challenging, should not pose a threat to any of the current participants,” said Alfonso Novelo, director of analysis for A.M. Best AmÉrica Latina, S.A. de C.V. However, Novelo noted that there might be room for merger and acquisition activity, especially in the case of companies that are concentrated by line of business.

For the full, complimentary copy of this report, please visit

To watch a video interview with Alfonso Novelo, please visit:

This report originally appeared in Best's Journal, dated August 4, 2014. Best's Journal is a biweekly publication that presents A.M. Best's original research, analysis and commentary on the global insurance industry, and is available exclusively as part of a subscription to the Best's Insurance News & Analysis service. More information about the Best's Insurance News & Analysis subscription service is available at To order, contact Customer Service at +(1) (908) 439 2200, ext. 5742 or at (800) 424-2378 when calling from the United States and Canada.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit

Copyright © 2014 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.

A.M. Best Company

Eli Sanchez, 52 55 5436-0236

Financial Analyst


Alfonso Novelo, 52 55 5436-0164

Director of Analysis


Christopher Sharkey, 908-439-2200, ext. 5159

Manager, Public Relations


Jim Peavy, 908-439-2200, ext. 5644

Assistant Vice President, Public Relations

Source: A.M. Best Company

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Source: Business Wire

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