Mexican insurance SII framework proves value through pandemic

Written by Adam Cadle

31/05/2023

The Solvency II (S2-MEX) framework for Mexican insurance has demonstrated solid value through the pandemic, rising interest rates and financial market volatility, according to a new Fitch Ratings report.

Originally implemented in Mexico in 2016, the framework continues to promote strong risk management and solvency of insurance market participants, Fitch stated.

During the past three years, S2-MEX alerted an early warning sign of weakness that fostered quick corrective action before capital level minimums were breached. Some entities with losses injected additional capital to comply with the regulatory SCR coverage ratio of 1.0x or above during 2021 and 2022.

"Overall the Mexican insurance market demonstrated its ability to maintain capital strength while withstanding the effects of the coronavirus pandemic and subsequent macroeconomic stress," Fitch stated. "Mexican insurance regulation is the most sophisticated in the region, with robust capital requirements, and Fitch classifies the country as a “group solvency” regulatory environment."

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