A.M. Best Removes From Under Review With Negative Implications and Affirms Credit Ratings of Chubb Seguros Panama S.A.

MEXICO CITY--(BUSINESS WIRE)-- A.M. Best has removed from under review with negative implications and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a” of Chubb Seguros Panama S.A. (Chubb Panama) (Panama). The outlook assigned to these Credit Ratings (ratings) is stable.

The rating actions follow A.M. Best’s review of the strategic importance of Chubb Panama to its group, and the completion of The Chubb Corporation’s merger into ACE INA Holdings Inc., which subsequently was renamed Chubb INA Holdings Inc. The ratings were placed under review in July 2015 following the announcement that ACE Limited was acquiring The Chubb Corporation.

The ratings reflect Chubb Panama’s strong risk-adjusted capitalization, its diversified business profile, a solid reinsurance program placed with Chubb Tempest Reinsurance Ltd. and the company’s affiliation to its ultimate parent, Chubb Limited, one of the world’s biggest insurance groups. This affiliation provides Chubb Panama synergies and operating efficiencies. Offsetting these positive factors are Chubb Panama’s modest, but growing market share within Panama’s insurance industry relative to the lines it writes, and the strong competitive environment in Panama’s insurance sector; however, the company partially mitigates this through a diversified business portfolio among other geographies.

Chubb Panama initiated operations in 2008 as ACE Seguros S.A., and continued with that brand name until 2016 when its name was changed to Chubb Seguros Panama S.A. The company writes mainly non-life and reinsurance business covering exposures throughout Latin America. In 2015, commercial property insurance was the company’s top performing business line and currently represents 38% of gross written premiums. The company’s main distribution channels are positioned with brokers. Chubb Panama has shown disciplined underwriting in a highly competitive market, consistently reporting overall premium sufficiency levels that compare positively with its competitors. Chubb Panama substantially increased its premium volume in 2015, enabling the company to enhance its underwriting profile, as demonstrated by a combined ratio of approximately 40%.

Chubb Panama’s risk-based capitalization remains fully supportive of its current ratings, as measured by Best’s Capital Adequacy Ratio (BCAR). The Panamanian subsidiary is mainly susceptible to underwriting risk given the current growth and retention of premium; however, the company’s strong underwriting results have enhanced overall profitability metrics, reflected in a return on equity of 36% in 2015. Moreover, the company benefits from being integrated into the group, gaining operational leverage through the same systems, procedures and enterprise risk management practices. The group historically has demonstrated its support to Chubb Panama through capital injections to fund growth opportunities.

Key rating factors that could lead to positive rating actions for Chubb Panama include continued favorable trends in profitability and capital growth supported by good underwriting practices. Conversely, a sharp deterioration in operating performance or a significant weakening of its capitalization, as measured by BCAR, could lead to negative rating actions.

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:

• Analyzing Insurance Holding Company Liquidity (Version March 25, 2013)
• Catastrophe Analysis in A.M. Best Ratings (Version Nov. 3, 2011)
• Evaluating Country Risk (Version May 02, 2012)
• Insurance Holding Company and Debt Ratings (Version May 6, 2014)
• Rating Members of Insurance Groups (Version Dec. 15, 2014)
• 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: July 2, 2015
• Date of Financial Data Used: June 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.

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A.M. Best

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

Associate 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