AM Best Downgrades Issuer Cote Insurance Company AG

London, November 07, 2023–(Business Wire)–AM the best Cote Insurance Company AG (Cote) has affirmed a B++ (Good) Financial Strength Rating (FSR), downgrading the Long-Term Issuer Credit Rating (Long-Term ICR) to “bbb” (Good) from “bbb+” (Good). ) (Switzerland). ICR’s long-term outlook has been revised to stable from negative, while FSR’s outlook remains stable.

The credit ratings (ratings) reflect the strength of Cott’s balance sheet, AM Best, which assesses its strong operational performance, independent business profile and appropriate corporate risk management. The rating reflects a rating drag due to the company’s relationship with Petroleos Mexicanos (PEMEX). Cote is a captive reinsurer of the Mexican state oil and gas company PEMEX.

The lowering of the long-term ICR reflects the further deterioration of PEMEX’s credit profile since AM Best’s final rating. This is partly due to the strong reinsurance regulatory regime in Switzerland, with strict requirements for capital adequacy and corporate governance, which provides some comfort in Kot’s future financial strength and independence.

Cote’s strong balance sheet is underpinned by its strong level of risk-adjusted capitalization as measured by the Best Capital Adequacy Ratio (BCAR). AM Best expects to maintain a coat buffer above minimum requirements for the strong BCAR review over the medium term, given its relatively low write-down capacity and conservative investment strategy. A compensating measure in the balance sheet strength assessment is that Kot tries to underwrite risks with a very high upper limit on reinsurance. The risk associated with this reliance is partially mitigated by a diverse panel of refinances and long-term relationships with insurers with good credit quality.

Cote’s strong historical earnings have driven the balance sheet, with a five-year (2018-2022) weighted average combined ratio of 38.3% (as calculated by AM Best). However, the results are exposed to volatility arising from low frequency, for heavy losses, all unwritten risks are concentrated in Mexico. In 2022, the combined ratio grew to 44.9% (from 85.8% in 2021) driven by lower claims. Underwriting results remained strong in the first six months of 2023, but a large offshore oil rig fire in the third quarter of 2023 could negatively impact year-end results. AM Best expects the captive’s operating performance to remain supportive of strong valuations over the cycle.

Cote is well integrated into PEMEX as the sole insurance captive and is important to the group as a cost-effective risk management tool.

AM Best continues to be the leading rating agency for alternative crash transmission components, with over 200 such vehicles rated worldwide. For current best credit ratings and information on the captive and alternative risk transfer insurance market, please visit

This press release corresponds to the credit ratings published on AM Best’s website. For all rating information regarding the release and relevant disclosures, including details of each individual rating agency mentioned in this release, please see AM Best’s Recent Rating Activity webpage. For more information on the use and limitations of credit rating opinions, please see the Best Credit Ratings Guide. For information on the proper use of BEST Credit Ratings, BEST Performance Ratings, BEST Primary Credit Reviews, and AM Best press releases, please see the Guide to Proper Use of BEST Ratings and Reviews.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in America, the company operates more than 100 businesses Countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

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Charlotte Vigier
Senior financial analyst
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Valeria Ermakova
Associate Director, Analytics
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Christopher Sharkey
Associate Director, Public Relations
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Al Slavin
Senior public relations specialist
+1 908 882 2318
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