A.M. Best Affirms Credit Ratings of Aseguradora Ancón, S.A.

MEXICO CITY--(BUSINESS WIRE)-- A.M. Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Aseguradora Ancón, S.A. (Ancón) (Panama). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Ancón’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management.

Ancón maintains adequate risk-adjusted capitalization at an assessed level of adequate, supported by a well-structured reinsurance program that covers the company’s different business lines, as well as a stable loss ratio. Offsetting these positive rating factors is the slow dynamism of Panama’s insurance market in recent years and the strong competition Ancón faces in its main segments.

Ancón is the sixth-largest insurer in Panama with a market share of 3.6% as of June 2018. Property/casualty products compose 68% of its business portfolio, with the remaining 32% made up of life products (including accident and health). The company’s main segments are auto and health, representing 37% and 21%, respectively, of its gross written premiums. The company holds two subsidiaries in Puerto Rico: Multinational Insurance Company (Multinational), a property/casualty insurer, and Multinational Life Insurance Company (Multinational Life), a life insurance company.

In 2017, the company’s combined ratio deteriorated, derived from lower commissions from ceded premiums; however, Ancón maintained a stable loss ratio and continued to benefit from reserve releases that started in 2014.

The prudent business strategy in terms of retention and growth has allowed Ancón to maintain stable levels of required capital while producing positive results and growth of its reported surplus. A comprehensive reinsurance program set with highly rated reinsurers further supports Ancón’s risk adjusted capital.

Panama’s insurance market so far in 2018 has shown improvements over the past two years, and as of June 2018, it has grown 3.8% on a year-to-year basis in real terms. Opportunities are still limited given the lack of dynamism in certain sectors (e.g., new cars sales and new infrastructure projects); however, A.M. Best expects Ancón to maintain a steady underwriting performance based on its current strategy, as evidenced by its loss ratio of 43.3% as of June 2018, an improvement from the loss ratio of 57.8% recorded at year-end 2017.

Positive movement in Ancón’s ratings or outlooks could take place if the company continues to implement its strategy in a profitable manner with continued support from its strong reinsurance program and stable levels of risk-adjusted capitalization. Negative rating actions could occur if the company’s operating results show a negative trend of sustained losses that affect its capitalization or business profile.

This press release relates to Credit Ratings that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

A.M. Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit www.ambest.com for more information.

Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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A.M. Best

Elí Sánchez

Senior Financial Analyst

+52 55 1102 2720, ext. 108

eli.sanchez@ambest.com

or

Christopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.com

or

Alfonso Novelo

Senior Director, Analytics

+52 55 1102 2720, ext. 107

alfonso.novelo@ambest.com

or

Jim Peavy

Director, Public Relations

+1 908 439 2200, ext. 5644

james.peavy@ambest.com

Source: A.M. Best