AM Best Upgrades Issuer Credit Rating of MAPFRE Panamá S.A.

AM Best has upgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to a+ from a and affirmed the Financial Strength Rating of A (Excellent) of MAPFRE Panam S.A. (MAPFRE Panam) (Panama City, Panama).

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Business Wire, Inc.

Retrieved on:

Thursday, February 14, 2019

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Tags:

Professional services, Insurance, IBEX-35, Mapfre, Credit rating agencies, Companies, Standard & Poor's, Financial markets, Finance

Geotags:

Mexico, Europe, CENTRAL AMERICA

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Summary

Key Points:

AM Best has upgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to a+ from a and affirmed the Financial Strength Rating of A (Excellent) of MAPFRE Panam S.A. (MAPFRE Panam) (Panama City, Panama).
The ratings reflect MAPFRE Panams strong risk-adjusted capitalization and geographic importance to MAPFRE S.A. (MAPFRE Group) in Central Americas insurance market, as well as the integration of the MAPFRE Groups practices and procedures into MAPFRE Panam.
Positive rating actions taken on its ultimate parent, MAPFRE S.A., also could result in further positive rating actions for MAPFRE Panam.
For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Bests Credit Ratings .

AM Best has upgraded the Long-Term Issuer Credit Rating
(Long-Term ICR) to “a+” from “a” and affirmed the Financial Strength
Rating of A (Excellent) of MAPFRE Panamá S.A. (MAPFRE Panamá)
(Panama City, Panama). The outlook of these Credit Ratings (ratings)
remains stable.

The ratings reflect MAPFRE Panamá’s balance sheet strength, which AM
Best categorizes as strongest, as well as its adequate operating
performance, neutral business profile and appropriate enterprise risk
management (ERM).

The Long-Term ICR upgrade reflects MAPFRE Panamá’s strategic importance
to, and strategic alignment with, MAPFRE Internacional S.A., as well as
the synergies and operating efficiencies derived from being a group
member of MAPFRE S.A., the leading insurer in Spain.

The ratings reflect MAPFRE Panamá’s strong risk-adjusted capitalization
and geographic importance to MAPFRE S.A. (MAPFRE Group) in Central
America’s insurance market, as well as the integration of the MAPFRE
Group’s practices and procedures into MAPFRE Panamá. The company
maintained its market position in 2018, ranked as Panama’s third-largest
insurer as of November 2018.

Partially offsetting these positive rating factors are the competitive
dynamics that persist in the property/casualty (P/C) segment despite
healthier growth rates.

MAPFRE Panamá is the third-largest insurer in Panama, ranking third in
the life, auto and P/C segment. Panama’s insurance industry has shown
signs of recovery as of November 2018, growing at a 5.8% rate, while
MAPFRE grew slightly below that during this period, after growing 7.1%
in 2017. Fluctuations in growth during 2017 and 2018 are explained by
fluctuations in the surety business, with a higher volume in 2017 and
lower in 2018.

MAPFRE Panamá’s solid capital base and good reserve position provide a
solid base for financial flexibility and strong risk-adjusted
capitalization levels. AM Best expects that the company’s ERM practices
and procedures implemented from the MAPFRE Group continue to affect
MAPFRE Panamá’s future performance positively.

MAPFRE Panamá’s combined ratio as of September 2018 has improved to
95.6% due to lower loss ratio, as underwriting has been adjusted to
reflect its risk experience. Administrative and acquisition expenses
have remained stable.

The strong competitive environment in Panama’s insurance market,
especially in segments in which MAPFRE Panamá has leading positions,
continues to generate challenging market conditions and increase risk
appetites across the industry, presenting operating performance
challenges in specific segments such as auto, individual life and health.

Positive rating actions taken on its ultimate parent, MAPFRE S.A., also
could result in further positive rating actions for MAPFRE Panamá.

Negative rating actions could result from a significant reduction in
MAPFRE Panamá’s risk-adjusted capitalization, either by constant
deterioration in its underwriting performance or unexpected losses that
render this measure to a level that no longer supports the current
ratings, or if the company deviates significantly from the policies,
practices and benefits assumed from its association with MAPFRE Group.
Additionally, negative rating actions at its ultimate parent could lead
to a downgrade of MAPFRE Panamá ratings.

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 Understanding
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 rating agency and information provider with a
unique focus on the insurance industry. Visit www.ambest.com
for more information.

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