MEXICO CITY--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a+” of Chubb Seguros Panamá S.A. (Chubb Panamá) (Panama). The outlook of these Credit Ratings (ratings) remains positive.
The ratings reflect Chubb Panamá’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The positive rating outlooks reflect Chubb Panamá´s sound underwriting practices, which support its consistent operating performance. The company´s balance sheet strength continues to be supported by risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), its diversified business profile, a solid reinsurance program placed with Chubb Tempest Reinsurance Ltd., as well as the company’s affiliation to its ultimate parent, Chubb Limited, one of the world’s largest insurance groups. This affiliation provides Chubb Panamá with synergies and operating efficiencies. Offsetting these positive rating factors are Chubb Panamá’s modest, but growing market share within Panama’s insurance industry relative to the lines of business it writes, and the strong competitive environment in Panama’s insurance sector; however, the company partially mitigates this through a diversified business portfolio spread across other geographies.
Chubb Panamá initiated operations in 2008 as ACE Seguros S.A., and continued with that brand name until 2016 when its name was changed to Chubb Seguros Panamá S.A. The company writes mainly non-life and reinsurance business, covering exposures throughout Latin America. In 2018, construction was the company’s top performing business line and currently represents 26% of gross written premiums. The company’s main distribution channels are positioned with brokers and cedent companies. Chubb Panamá has shown disciplined underwriting in a highly competitive market, consistently reporting overall premium sufficiency levels that compare positively with its competitors. In 2018, Chubb Panamá achieved a combined ratio of approximately 68%.
The Panama subsidiary’s strong underwriting results have sustained sound overall profitability, as reflected in a return on equity of 18.3%, and contributed to expanding the company’s capital base in 2018. Chubb Panamá’s risk-based capitalization remains fully supportive of its current ratings, as measured by BCAR. Moreover, the company benefits from being integrated into the group, gaining operational leverage through the same systems, procedures and ERM practices. The group historically has demonstrated its support to Chubb Panamá through capital injections to fund growth opportunities.
Key factors that could lead to positive rating actions for Chubb Panamá include continued favorable trends in profitability and capital growth supported by good underwriting practices. Conversely, a sharp deterioration in operating performance or a significant weakening of its risk-adjusted capitalization could lead to negative rating actions. Additionally, if AM Best determines that Chubb Panamá ´s strategic importance has diminished, the ratings also could be downgraded.
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