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

The rating affirmations reflect CIS’ excellent risk-adjusted capitalization, historically positive technical and bottom line results, leading position in Panama’s insurance market, strong reinsurance program, seasoned management team and solid risk-management practices. Partially offsetting these positive rating factors are the challenges CIS faces operating in a relatively limited and increasingly competitive insurance market, as well as its concentration in Panama.

CIS initiated operations in 1910 as a multi-line insurer and ranked second in Panama for 2016 with a 15.2% market share of gross premiums. The company mainly underwrites health, automobile, group life and miscellaneous business. CIS operates through a network of branch offices in several cities of Panama.

CIS’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is excellent and supportive of the ratings. Historically, the company has increased capital as a result of positive bottom line results driven by a consistent inflow of underwriting and investment income, reflecting the management team’s knowledge and experience in the market. A.M Best expects the company’s capitalization to remain stable in the upcoming years.

In 2016, CIS maintained a positive operating performance as reflected by a combined ratio of 90.9% and a return on premiums of 17.2%. These results are supported by a continued strong performance of its group life, health and auto businesses. In addition, CIS’ individual life and surety businesses improved its performance in comparison with the previous year due to a mix of improved underwriting and a strategic focus on specific niches. Financial income continues to support CIS’ results while it maintains a sound risk profile; however, the company is not dependent on these revenues to achieve positive bottom line results. CIS continues to underperform in its fire business, mainly derived from strong competition in this business line, which is also generating losses in this industry segment. Although the company’s overall performance is strong, it constantly reviews its underwriting guidelines in order to improve the performance of business segments that are deviating from targets.

CIS’ growth was in line with Panama’s insurance industry; the company diminished its growth given the reduction in government business while the overall market is slowing.

Despite the many positive characteristics of CIS, the ratings are still limited by the competitive environment present in the market, as well as A.M. Best’s perception of the country risk in Panama, which has an A.M. Best country risk tier ranking of CRT-4, the second highest level in this scale. Positive factors that might improve the rating level or outlook include improvements in Panama’s risk profile in combination with a stable upward trend in CIS’ profitability, while maintaining supportive risk-adjusted capitalization. Factors that might lead to negative rating actions include protracted adverse underwriting and overall performance, a significant deterioration in its risk-adjusted capitalization or a downgrade of Panama’s country risk tier rating.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Key insurance criteria reports utilized:

• Catastrophe Analysis in A.M. Best Ratings (Version Nov. 3, 2011)
• Evaluating Non-Insurance Ultimate Parents (Version Feb. 24, 2012)
• Evaluating Country Risk (Version May 2, 2012)
• Risk Management and the Rating Process for Insurance Companies (Version April 2, 2013)
• Understanding Universal BCAR (Version April 28, 2016)

View a general description of the policies and procedures used to determine credit ratings. For information on the meaning of ratings, structure, voting and the committee process for determining the ratings and monitoring activities, please refer to “Understanding Best’s Credit Ratings.”

• Previous Rating Date: March 18, 2016
• Date of Financial Data Used: Dec. 31, 2016

This press release relates to rating(s) that have been published on A.M. Best's website. For additional 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.

A.M. Best does not validate or certify the information provided by the client in order to issue a credit rating.

While the information obtained from the material source(s) is believed to be reliable, its accuracy is not guaranteed. A.M. Best does not audit the company’s financial records or statements, or otherwise independently verify the accuracy and reliability of the information; therefore, A.M. Best cannot attest as to the accuracy of the information provided.

A.M. Best’s credit ratings are independent and objective opinions, not statements of fact. A.M. Best is not an Investment Advisor, does not offer investment advice of any kind, nor does the company or its Ratings Analysts offer any form of structuring or financial advice. A.M. Best’s credit opinions are not recommendations to buy, sell or hold securities, or to make any other investment decisions. View our entire notice for complete details.

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A.M. Best

Salvador Smith, +52 55 1102 2720, ext. 109

Associate Financial Analyst

salvador.smith@ambest.com

or

Alfonso Novelo, +52 55 1102 2720, ext. 107

Director, Analytics

alfonso.novelo@ambest.com

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Manager, Public Relations

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Jim Peavy, +1-908-439-2200, ext. 5644

Director, Public Relations

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Source: A.M. Best