S&P Global Ratings on Dec. 10 revised the outlook on Seguros El Potosi SA to negative from stable, while affirming the insurer's financial and credit strength ratings at "mxAA."
The outlook revision follows an announcement from Instituto del Fondo Nacional para el Consumo de los Trabajadores in late November that it would create its own payment protection fund for workers. The decision effectively removes the need for those workers to use Seguros El Potosi for life and unemployment insurance when borrowing from the institute.
These insurance lines accounted for about 40% of total premiums issued by Seguros El Potosi in recent quarters, and 30% of net income for full-year 2018. S&P believes the loss of this income will pressure its growth plans and could deteriorate business diversification if it does not replace the lost business or premiums.