CORRECTING and REPLACING A.M. Best Affirms Credit Ratings of MAPFRE Panamá S.A.

CORRECTION...by A.M. Best Rating Services, Inc.

MEXICO CITY--()--Please replace the release dated February 3, 2017, with the following corrected version due to multiple revisions.

The corrected release reads:

A.M. BEST AFFIRMS CREDIT RATINGS OF MAPFRE PANAMÁ S.A.

A.M. Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” 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 strong risk-adjusted capitalization and geographic importance to MAPFRE S.A. (MAPFRE Group) in the Central American market, as well as the integration of the MAPFRE Group’s practices and procedures into MAPFRE Panamá. The company maintained its market position during 2015 and 2016 and ranked as Panama’s third largest insurer as of December 2016.

Partially offsetting these positive rating factors are the slow growth in Panama’s insurance industry, lower governmental infrastructure expense in large projects and the competitive dynamics that persist in the property/casualty segment.

MAPFRE Panamá is the largest auto insurer in Panama, and ranks second in the life segment and third in the property/casualty segment. Panama’s insurance industry has gradually decelerated since 2015, finally reaching an almost nil growth during 2016. MAPFRE Panamá took advantage of the slowing conditions during this period and grew its direct gross written premium by 20.5% during 2015 and 7.2% in 2016.

MAPFRE Panamá’s solid capital base and good reserve position provide a solid base for financial flexibility and strong risk-adjusted capitalization levels. Enterprise risk management practices and procedures from the MAPFRE Group have been implemented; A.M. Best expects that these measures will continue to positively affect the company’s future performance.

Year-end 2016 results show an upward trend in the company’s loss ratio; however, MAPFRE Panamá’s combined ratio remained at a similar level to that in 2015, due to adequate expense management and by the incorporation of special businesses with low acquisition costs and high claim coverage. Earnings before taxes for the company increased 3.8% in 2016.

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

A.M. Best considers MAPFRE Panamá to be well-positioned at its current rating level. Positive rating actions could occur if the company is able to improve its technical income and achieve its growth targets, while consistently increasing its capital base. Additionally, positive rating actions at its ultimate parent could lead to improvements in MAPFRE Panamá ratings.

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.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Key insurance criteria reports utilized:

  • Analyzing Insurance Holding Company Liquidity (Version March 25, 2013)
  • Catastrophe Analysis in A.M. Best Ratings (Version Nov. 3, 2011)
  • Evaluating Country Risk (Version May 2, 2012)
  • Insurance Holding Company and Debt Ratings (Version May 6, 2014)
  • Rating Members of Insurance Groups (Version Dec. 15, 2014)
  • Risk Management and the Rating Process for Insurance Companies (Version April 2, 2013)
  • Understanding Universal BCAR (Version April 28, 2016)

View a general description of the policies and procedures used to determine credit ratings. For information on the meaning of ratings, structure, voting and the committee process for determining the ratings and monitoring activities, please refer to “Understanding Best’s Credit Ratings.”

  • Previous Rating Date: Jan. 13, 2016
  • Date of Financial Data Used: Dec. 31, 2016

This press release relates to rating(s) that have been published on A.M. Best's website. For additional 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 A.M. Best’s Recent Rating Activity web page.

A.M. Best does not validate or certify the information provided by the client in order to issue a credit rating.

While the information obtained from the material source(s) is believed to be reliable, its accuracy is not guaranteed. A.M. Best does not audit the company’s financial records or statements, or otherwise independently verify the accuracy and reliability of the information; therefore, A.M. Best cannot attest as to the accuracy of the information provided.

A.M. Best’s credit ratings are independent and objective opinions, not statements of fact. A.M. Best is not an Investment Advisor, does not offer investment advice of any kind, nor does the company or its Ratings Analysts offer any form of structuring or financial advice. A.M. Best’s credit opinions are not recommendations to buy, sell or hold securities, or to make any other investment decisions. View our entire notice for complete details.

A.M. Best receives compensation for interactive rating services provided to organizations that it rates. A.M. Best may also receive compensation from rated entities for non-rating related services or products offered by A.M. Best. A.M. Best does not offer consulting or advisory services. For more information regarding A.M. Best’s rating process, including handling of confidential (non-public) information, independence, and avoidance of conflicts of interest, please read the A.M. Best Code of Conduct.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2017 by A.M. Best Rating Services, Inc. and/or its subsidiaries. ALL RIGHTS RESERVED.

Contacts

A.M. Best
Elí Sánchez, +52 55 1102 2720, ext. 108
Financial Analyst
eli.sanchez@ambest.com
or
Alfonso Novelo, +52 55 1102 2720, ext. 107
Director, Analytics
alfonso.novelo@ambest.com
or
Christopher Sharkey, +1 908-439-2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Jim Peavy, +1 908-439-2200, ext. 5644
Director, Public Relations
james.peavy@ambest.com

Contacts

A.M. Best
Elí Sánchez, +52 55 1102 2720, ext. 108
Financial Analyst
eli.sanchez@ambest.com
or
Alfonso Novelo, +52 55 1102 2720, ext. 107
Director, Analytics
alfonso.novelo@ambest.com
or
Christopher Sharkey, +1 908-439-2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Jim Peavy, +1 908-439-2200, ext. 5644
Director, Public Relations
james.peavy@ambest.com