AM Best Affirms El Aguila’s Ratings, Notes Stable Outlook and Parental Support

AM Best has affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Rating (ICR) of 'a-' (Excellent) for El Aguila, Compañia de Seguros, S.A. de C.V., a Mexico-based property/casualty insurer. The ratings also include the Mexico National Scale Rating of 'aaa.MX' (Exceptional), with a stable outlook. These ratings reflect El Aguila’s strong balance sheet, marginal operating performance, neutral business profile, and adequate enterprise risk management. The company operates as a wholly owned subsidiary of Great American Insurance Company, which maintains a superior A+ FSR and an 'aa-' Long-Term ICR, both with stable outlooks, indicating solid parental support including ongoing capital contributions. Since its foundation in 1994, El Aguila has diversified from focusing primarily on the motor business to expanding into other commercial property/casualty segments, targeting small and medium enterprises mainly in Mexico. Compared to peers, El Aguila’s smaller scale results in higher geographic concentration, which increases sensitivity to regional market conditions within Mexico. The company emphasizes higher policy renewal rates through increased investment in direct sales and advertising channels, diverging from the traditional agent or bancassurance-driven distribution model prevalent in Mexico’s auto insurance sector. In 2024, El Aguila's portfolio grew by 7.5% year-over-year, with projections to increase by approximately 8.4% in 2025. Despite high acquisition costs in its auto insurance line and the prior impact of Hurricane Otis, El Aguila’s operating performance improved with a better overall loss ratio in 2024. However, results through September 2025 indicate some volatility with negative net income recorded. Nevertheless, the company benefits from continued capital injections from its parent to maintain capital adequacy. Risk-adjusted capitalization, measured via Best’s Capital Adequacy Ratio (BCAR), remains very strong with underwriting risk as the primary driver of required capital. Capital infusion by Great American in 2023 and 2024 helped stabilize the insurer after consecutive years of negative earnings. AM Best will monitor El Aguila’s premium leverage relative to policyholder surplus as a key factor in ongoing balance sheet strength assessment. Downward rating adjustments may occur if El Aguila’s capital position and risk-adjusted capitalization weaken materially, or if the strategic importance to its parent diminishes. Positive rating changes in the near term appear unlikely unless the company can demonstrate sustained improvement in underwriting results and capitalization. This credit rating affirmation underscores the importance of backing from a strong parent company and prudent enterprise risk management practices for smaller regional insurers operating in concentrated markets. El Aguila’s shift toward diversified lines of business and enhanced customer retention efforts indicate strategic initiatives aimed at improving operational stability amid competitive and natural catastrophe challenges. The ratings and related disclosures are accessible via AM Best’s official website. AM Best maintains global operations specializing in insurance credit ratings, analytics, and industry data.