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S&P moves to negative outlook on Zurich's Mexican units

S&P Global Ratings on Oct. 9 downgraded Zurich Compania de Seguros S.A.'s financial strength rating to mxAA+ from mxAAA, while revising its outlook, as well as those of Zurich Vida Compania de Seguros SA and Zurich Fianzas México SA de CV, to negative from stable.

The rating agency removed the companies' ratings from under criteria observation.

In S&P Global Ratings' view, the business profile of the Mexico-based insurers faces weaknesses due to historically negative operating performance, despite a much better showing in the first half of 2019. Moreover, the Mexican group has low capitalization levels and is dependent on injections from its parent company, Zurich Insurance Group AG.

On the other hand, the rating agency still considers the subsidiaries to be strategically important and fundamental to the operation of its parent and expects support to equally flow to all three companies.

The negative outlook reflects the possibility of S&P Global Ratings lowering the companies' ratings over the next two years if they do not show improved operating performance as observed in the first half of this year.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings. Descriptions in this news article were not prepared by S&P Global Ratings.