AM Best Affirms Credit Ratings of Compañía Internacional de Seguros, 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” (Excellent) of Compañía Internacional de Seguros, S.A. (CIS) (Panama City, Panama). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect CIS’ balance sheet strength, which AM Best assesses at the strongest level, as well as CIS’ strong operating performance, neutral business profile and appropriate enterprise risk management.

CIS’ overall strength is underpinned by its risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), historically positive technical and bottom-line results, its leading position in Panama’s insurance market, a strong reinsurance program, a seasoned management team, solid risk-management practices and increased geographic diversification through Aseguradora del Istmo (ADISA) S.A. in Costa Rica. Partially offsetting these positive rating factors are the challenges CIS faces operating in a relatively limited and increasingly competitive insurance market.

CIS initiated operations in 1910 as a multiline insurer and ranks among the top insurance companies in Panama in terms of premium market share. The company’s largest business lines include health, automobile, miscellaneous, group and individual life insurance. CIS operates through a network of brokers and office branches in several cities throughout Panama.

Historically, CIS has increased its capital base at a 10.4% compound annual growth rate as a result of positive bottom-line results, driven by a consistent inflow of underwriting and investment income, which reflects the management team’s market knowledge and experience. AM Best expects the company’s risk-adjusted capitalization to remain stable.

In 2021, CIS operating performance was characterized by a combined ratio of 92.7% and a return on earned premiums of 32.4%. These results were supported by continued positive performance in its auto, personal accidents, individual life and health businesses, which were the main contributors to the company’s net income during the period. The loss ratio in its group life segment was affected by Covid-19 related deaths, and also reflected in a reduction of the premium volume. This was partially offset by the auto business, which generated positive underwriting results, despite the aggressive price competition resulting from the profitable period for the market.

The company leverages its health segment performance through Blue Cross Blue Shield, a health care provider network in the United States.

Financial income continues to support CIS’ results while maintaining a sound risk profile; however, the company is not dependent on this revenue to achieve positive bottom-line results. Although CIS’ overall performance is strong, it constantly reviews its underwriting guidelines to improve the performance of business segments that are deviating from targets.

Despite the many positive characteristics of CIS, the ratings are limited by the competitive environment present in its domestic market, as well as AM Best’s perception of country risk in Panama, which has an AM Best country risk tier ranking of CRT-4, the second-highest level in this scale.

AM Best considers CIS to be well-positioned at its current rating levels, and positive rating actions are not expected in the near term. Factors that might lead to negative rating actions include protracted adverse underwriting and overall operating performance, changes in strategic alliances, a significant deterioration in CIS’ risk-adjusted capitalization or a downgrade of Panama’s country risk tier rating.

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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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 London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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