A.M. Best Affirms Ratings of ASSA Compania de Seguros, S.A., Lion Reinsurance Company Limited and Reaseguradora America SPC Ltd

A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Excellent) and issuer credit rating (ICR) of "a" of ASSA Compania de Seguros, S.A. (ASSA) (Panama City, Panama).

A.M. Best also has affirmed the FSR of A- (Excellent) and ICRs of "a-" of Lion Reinsurance Company Limited (Lion Re) (Bermuda) and Reaseguradora America SPC Ltd (RAM Re) (Cayman Islands). All companies are ultimately owned by Grupo ASSA, S.A. (Grupo ASSA), a financial services holding company publicly traded on the Panama stock exchange. The outlook for all ratings is stable.

The ratings reflect ASSA's continued excellent operating results, favorable capitalization and strong business profile. ASSA maintains a well-diversified book of business that includes both property/ casualty and life/health products.

In 2013, ASSA continued its strong underwriting and operating profitability, which it received in part from favorable overall earnings. The company has a proven track record of solid operating earnings, a superior capital position and extensive local market knowledge. Additionally, the improved operating environment in recent years has outweighed the company's concentration and regulatory concerns. ASSA also benefits from established risk management systems and strong reinsurance programs across most lines of business.

Partially offsetting these positive rating factors is ASSA's risk concentration in a geographically limited insurance market, along with operating in a country that A.M. Best considers to have an elevated level of country risk compared to ASSA's ratings. Furthermore, the Panamanian insurance market is becoming increasingly competitive as local and large outside insurers continue to compete for market share.

Positive rating actions could occur if ASSA maintains its consistently strong underwriting performance and long-term profitability in conjunction with an upgrading of Panama's country risk tier. Negative rating triggers could occur if there were a significant decline in ASSA's risk-based capitalization, sustained adverse operating performance or a downgrading of Panama's country risk tier.

The ratings of Lion Re acknowledge its good capital position, conservative operating strategy and explicit parental support. The ratings also consider Lion Re's strategic role as a captive reinsurer of ASSA Tenedora, S.A.

Also inuring to Lion Re's ratings is its sound business plan, good underwriting performance and liquidity measures during its first three years of operation. Lion Re operates as a Bermuda-based reinsurer focused on writing a combination of property/casualty and health and group life business from affiliated insurers.

The ratings of RAM Re reflect its adequate capitalization, explicit parental support and strategic role as an alternative risk transfer vehicle.

RAM Re's ratings also reflect a sound business plan, upon which the profitability and liquidity measures of the ratings are based. The ratings are supported by an amount of capital that meets A.M. Best's requirements for newly formed companies as measured by Best's Capital Adequacy Ratio (BCAR). RAM Re was incorporated on January 2013 and licensed by the Cayman Island Monetary Authority (CIMA) as a Class B Insurer under Section 4 of the Law. RAM Re will write reinsurance business mainly with ASSA Compania Tenedora, S.A.'s operating subsidiaries in Panama, Costa Rica, Nicaragua and El Salvador.

RAM Re will underwrite bancassurance, property/casualty (excluding or managing catastrophe cover under limited conditions), credit and debit card fraud, unemployment benefits and short-term group life related products.

These positive rating factors are partially offset by RAM Re's execution risk due to its unproven start-up nature.

Drivers that could lead to an upgrading of the ratings and/or a positive outlook for Lion Re and Ram Re are stable underwriting performances, as well as reduced overall net exposure over the next few years and successful implementation of their business plans. Factors that could lead to a downgrading of the ratings and/or a negative outlook are a material loss of capital from either claims or investments, a reduced level of capital that does not support their ratings or an increase in net retention.

ASSA, Lion Re and Ram Re's ratings are tied to A.M. Best's internal assessment of Grupo ASSA; therefore, an unfavorable operating performance or material loss of capital could result in changes to these captives' ratings.

A.M. Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated in the United States and throughout the world.

For current Best's Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit ambest.com/captive.

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