AM Best has affirmed the Financial Strength Rating (FSR) 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).

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

The 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 positive outlook on the FSR and Long-Term ICR reflects AM Best's expectation that the company's balance sheet strength will continue to improve, underpinned by positive bottom-line results. 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 Best's Capital Adequacy Ratio (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, focused on the auto insurance line of business and other property/casualty business lines. VSSM also underwrites specialty products, offering coverage in cases 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 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 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.

The methodology used in determining these ratings is Best's Credit Rating Methodology (Version Jan. 18, 2024), 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:

Best's National Scale Ratings (Version Jun. 15, 2023)

Available Capital and Insurance Holding Company Analysis (Version Jan. 18, 2024)

Evaluating Country Risk (Version May 4, 2023)

Rating New Company Formations (Version Sept. 7, 2023)

Scoring and Assessing Innovation (Version Feb. 27, 2023)

Understanding Global BCAR (Version July 6, 2023)

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, relevant sources of information and the frequency for updating ratings, please refer to Guide to Best's Credit Ratings.

Previous Rating Date: Feb. 23, 2023

Initial Rating Date: Feb. 26, 2020

Date Range of Financial Data Used: Dec. 31, 2017-Dec. 31, 2023

Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.

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