A.M. Best Removes From Under Review and Downgrades Credit Ratings of Aseguradora del Istmo, S.A.; Withdraws Credit Ratings of Liffey Reinsurance Company, Designated Activity Company

MEXICO CITY--(BUSINESS WIRE)-- A.M. Best has removed from under review with negative implications and downgraded the Financial Strength Rating (FSR) to a Non-Rating Designation of E (Under Regulatory Supervision) from B++ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “e” from “bbb” of Aseguradora del Istmo, S.A. (ADISAP) (Panama City, Panama). Additionally, A.M. Best has withdrawn the FSR of B (Fair) and the Long-Term ICR of “bb+” of Liffey Reinsurance Company, Designated Activity Company (Liffey Re).

The rating actions taken on ADISAP reflect the Superintendent of Insurance and Reinsurance of Panama’s (SSRP) administrative and operational control over the company, announced on February 21, 2017. These actions were publicized through a press release issued by the SSRP, in which the regulator stated that ADISAP failed to comply with the regularization plan set by the SSRP, has not been able to substitute surety reinsure quota share and facultative contracts provided by its parent company, Istmo Compañía de Reaseguros, Inc. (Istmo Re), on ongoing surety policies issued prior to Feb. 1, 2016, and is in breach of the regulatory corporate governance dispositions set by the SSRP.

SSRP’s regulatory action came after review of the company’s operations, and an on-site regulatory inspection at ADISAP offices. ADISAP was asked to comply with a regulatory plan on Jan. 6, 2017, to correct the breaching of points 5 and 6 of article 85 of the Law No. 12 of April 3, 2012. However, as of Feb. 20, 2017, actions implemented were not satisfactory to meet the regularization plan, and therefore through memorandum DSES-M-77-17, the Director of Supervision of Insurance and Reinsurance Companies recommended the taking of administrative and operational control of ADISAP. This regulatory action is expected to last no less than 30 days and up to a maximum of 90 days.

A.M. Best will monitor closely ADISAP’s ratings, as this regulatory action develops.

Liffey Re’s ratings have been withdrawn following the transformation of the reinsurance company into a partnership without insurance activity. This decision came after its parent company, Istmo Re, ceased underwriting activity on which Liffey Re acted as a captive reinsurance company of Istmo Re.

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 Country Risk (Version May 2, 2012)
• Rating Members of Insurance Groups (Version Dec. 15, 2014)
• Rating Surety Companies (Version Aug. 13, 2014)
• Risk Management and the Rating Process for Insurance Companies (Version April 2, 2013)
• Rating Run-off Insurers and Specialists (Version March 25, 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.”

For ADISAP:

• Previous Rating Date: Aug. 26, 2016
• Date of Financial Data Used: Dec. 31, 2016

For Liffey Re:

• Previous Rating Date: Dec. 2, 2016
• Date of Financial Data Used: Sept. 30, 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.

A.M. Best receives compensation for interactive rating services provided to organizations that it rates. A.M. Best may also receive compensation from rated entities for non-rating related services or products offered by A.M. Best. A.M. Best does not offer consulting or advisory services. For more information regarding A.M. Best’s rating process, including handling of confidential (non-public) information, independence, and avoidance of conflicts of interest, please read the A.M. Best Code of Conduct.

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A.M. Best

Elí Sánchez, +52 55 1102 2720, ext. 108

Senior Financial Analyst

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

Director, Analytics

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Christopher Sharkey, +1 908 439 2200, ext. 5159

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

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Source: A.M. Best