In April 2016 the National Insurance and Bonds Commission (CNSF) amended the Sole Provisions on Insurance and Bonds to include the first Latin-American rating company authorised to issue credit ratings to foreign reinsurers.

Pursuant to the Law of Insurance and Bonds Companies, Mexican insurance and bonding companies must cede risks to Mexican or foreign reinsurers in order to ensure proper diversification of underwritten risks. In the case of ceding risks to foreign reinsurers, these must be registered with the CNSF's General Registry of Foreign Reinsurers.

Such registration is granted at the CNSF's discretion to first-rate foreign reinsurers that meet solvency and stability requirements. These requirements include specific credit ratings issued by recognised credit rating agencies. HR Ratings de México, SA de CV – a Latin-American specialised rating company – is now included as an agency authorised to issue such credit ratings. Consequently, foreign reinsurers must comply, at minimum, with one of the following ratings:

  • a B+ and FPR=5 rating issued by AM Best;
  • a BBB- rating issued by Fitch;
  • a Baa3 rating issued by Moody's;
  • a BBB- rating issued by Standard and Poor's; or
  • a HR BBB-(G) rating issued by HR Ratings de México, SA de CV.

Foreign reinsurers must submit evidence of their compliance, which will be renewed annually.

For further information on this topic please contact Carlos Ramos Miranda at Hogan Lovells BSTL by telephone (+52 55 5091 0000) or email (carlos.ramos@hoganlovells.com). The Hogan Lovells website can be accessed at www.hoganlovells.com

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.