AM Best Assigns Credit Ratings to Kot Insurance Company AG

AM Best has assigned a Financial Strength Rating of B++ (Good) and a Long-Term Issuer Credit Rating of “bbb+” to Kot Insurance Company AG (Kot) (Switzerland). The outlook assigned to these Credit Ratings (ratings) is stable.

Kot is a captive reinsurer of Petroleos Mexicanos (PEMEX), the Mexican state-owned oil and gas company.

The ratings reflect Kot’s balance sheet strength, which AM Best categorises as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management. The ratings also reflect a rating drag due to Kot’s ownership by PEMEX, reflecting the weaker credit profile of the parent.

Kot’s very strong balance sheet is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best expects Kot to maintain a buffer over the minimum requirements for the strongest BCAR assessment in the medium term, supported by its relatively low net underwriting leverage and conservative investment strategy. An offsetting rating factor in the balance sheet strength assessment is Kot’s dependence on reinsurance to write large risks; however, the risks associated with this dependence are mitigated partly by long-standing relationships with reinsures of good credit quality.

Kot’s robust historical earnings have been driven by its underwriting account. The combined ratio remained excellent at 20% in 2019 (2018: 21%), below the five-year weighted average of 38% (2015-2019).

Kot’s five-year weighted average return on equity is 24% (2015-2019). AM Best expects the captive’s operating performance to remain supportive of a strong assessment, although prospective results are exposed to some degree of volatility stemming from low frequency, high severity losses.

Kot is well-integrated within PEMEX and is important to the group as a cost-effective risk management tool. However, as PEMEX’s single reinsurance captive, Kot’s underwritten risks are concentrated in Mexico.

AM Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media – Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

Copyright © 2020 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Algirdas Karvelis
Financial Analyst
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Valeria Ermakova
Associate Director, Analytics
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Christopher Sharkey
Manager, Public Relations
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Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
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