AM Best Affirms Credit Ratings of MAPFRE Panamá S.A.

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 MAPFRE Panamá S.A. (MAPFRE Panamá) (Panama City, Panama). The outlook of these Credit Ratings (ratings) is stable.

MAPFRE Panamá is a member of the MAPFRE S.A., which on a consolidated basis has a balance sheet strength that AM Best categorizes as very strong, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management (ERM).

The ratings reflect MAPFRE Panamá’s geographic and strategic importance to the MAPFRE group, given its Central American presence, as well as the integration of the MAPFRE group’s practices, procedures, reinsurance, draft facilities, underwriting selection and ERM framework into MAPFRE Panamá, and the synergies and operating efficiencies derived from being a group member. MAPFRE Panamá maintained its market position in 2019 as Panama’s third-largest insurer. Partially offsetting these positive rating factors are the competitive dynamics that persist in Panama’s property/casualty (P/C) segment.

MAPFRE Panamá ranked second among Panama’s health insurers and third in the country’s automobile and P/C segments. While Panama’s insurance industry showed signs of contraction in 2019, MAPFRE Panamá grew by 3.7% during this period, after recovering from a 2.8% year-over-year decline in 2018. Fluctuations in growth are explained by a material decrease in assumed reinsurance business, led by growing competition in the bancassurance sector.

MAPFRE Panamá’s strongest risk-adjusted capitalization, as measured on a consolidated basis, solid capital base and good reserve position provide a sound financial flexibility. AM Best expects the company to sustain its capitalization level, in addition to ERM practices and procedures implemented from the MAPFRE group. This should continue to influence MAPFRE Panamá’s future performance positively.

MAPFRE Panamá’s combined ratio for 2019 improved to 95.3% due to lower loss ratio, as underwriting, mainly in the health and automobile business lines, was adjusted to reflect its risk experience. Administrative and acquisition expenses have remained stable and well-contained.

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

If there are positive rating actions on MAPFRE S.A.’s main operating subsidiaries, as a result of a change in the key rating fundamentals, including successfully expanding of its profile while maintaining strong operating performance and risk-adjusted capitalization, the ratings of MAPFRE Panamá will likely move in tandem. Conversely, if there are negative rating actions on the MAPFRE group, as a result of a sustained decline in operating performance below AM Bests expectation for the strong assessment level, or a sustained deterioration in MAPFRE S.A.’s consolidated risk-adjusted capitalization, the ratings of MAPFRE Panamá would mirror those same actions.

A change in AM Best’s perception regarding the actual or perceived level of MAPFRE Panamá’s strategic importance to the MAPFRE group also could impact the company’s 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 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 www.ambest.com.

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