AM Best


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


CONTACTS:

Elí Sánchez
Senior Financial Analyst
+52 55 1102 2720, ext. 108
eli.sanchez@ambest.com

Alfonso Novelo
Director, Analytics
+52 55 1102 2720, ext. 107
alfonso.novelo@ambest.com
Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Assistant Vice President, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

MEXICO CITY - SEPTEMBER 15, 2016 12:21 PM (EDT)
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 improved underwriting metrics and bottom-line results, which are supported by a well-structured reinsurance program that covers its different business lines, which has allowed the company to maintain adequate risk-adjusted capitalization for its current rating level. Offsetting these positive rating factors are the marginal growth of the Panama insurance sector during 2016 and strong competition within Ancon’s main segments.

Ancón is the seventh-largest insurer in Panama with a market share of 4.7% as of June 2016. Property/casualty products compose 72% of its business portfolio, with the remaining 28% made up of life products (including accident and health). The company’s main property/casualty segments are auto and surety, representing 30% and 27%, 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 2015, the company adjusted its underwriting strategy in order to improve its profitability, and as a result, ceded premium increased, particularly for its auto business. This allowed for retained reserve releases, improved acquisition costs and lower claims that ultimately resulted in an improvement in its combined ratio, to 96.9% from 104.4% in the previous year. Such change is supported by a comprehensive reinsurance program set with highly rated reinsurers.

Risk-adjusted capitalization for the company remains adequate for its current rating level. Its capital base was strengthened further in 2015 by a capital contribution of USD 5.0 million for the acquisition of Multinational Life shares, for which Ancón paid USD 3.4 million and capitalized the rest, proving the commitment of Ancón’s shareholders to support its companies.

The insurance market in Panama so far in 2016 has experienced a slowdown, and as of July 2016, it has grown marginally by 0.8% on a year-to-year basis. As a result, growth opportunities may be limited; however, Ancón has maintained profitable business, as shown by its year-end 2015 return on equity of 4.1%, and A.M. Best expects it to maintain its current performance through the end of the year.

Positive movement in Ancón’s ratings or outlook could take place if the company continues to implement its strategy in a profitable manner, while continuing to be supported by a strong reinsurance program and stable levels of risk adjusted capitalization. Negative rating actions could occur if the company’s operating results present a negative trend of sustained losses that affect its capitalization or business profile.

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)

  • Evaluating Non-Insurance Ultimate Parents (Version Feb. 24, 2012)

  • Evaluating Country Risk (Version May 02, 2012)

  • Insurance Holding Company and Debt Ratings (Version May 06, 2014)

  • Ratings 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 02, 2013)

  • Understanding Universal BCAR (Version April 28, 2016)

View a general description of the policies and procedures used to determine credit ratings. Also in accordance with Mexican regulations, the following is a link to required disclosures – A.M. Best America Latina Supplementary Disclosure. For information on the structure, voting and the committee process for determining the ratings and monitoring activities please refer to “Understanding Best’s Credit Ratings.”


  • Previous Rating Date: Aug. 5, 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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