AM Best


A.M. Best Affirms Credit Ratings of Compañía Internacional de Seguros, S.A.


CONTACTS:

Salvador Smith
Associate Financial Analyst
+52 55 1102 2720, ext. 109
salvador.smith@ambest.com

Alfonso Novelo
Senior 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
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

MEXICO CITY - JANUARY 18, 2018 01:15 PM (EST)
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 ratings reflect CIS’ balance sheet strength, which A.M. Best categorizes as strongest, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.

CIS’ overall strength is underpinned by risk-adjusted capitalization being at the strongest level, historically positive technical and bottom line results, its leading position in Panama’s insurance market, a strong reinsurance program, a seasoned management team, solid risk-management practices and increasing geographic diversification through the acquisition of Aseguradora del Istmo (ADISA) S.A. in Costa Rica. Partially offsetting these positive rating factors are the challenges CIS faces operating in a relatively limited and increasingly competitive insurance market.

CIS initiated operations in 1910 as a multi-line insurer and currently ranks among the top companies in terms of premium market share in 2017. The company underwrites mainly health, automobile, group and individual life, and miscellaneous business. CIS operates through a network of brokers and office branches in several cities throughout Panama.

CIS’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is at the strongest level and is 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, which reflects the management team’s market knowledge and experience. A.M Best expects the company’s capitalization to remain stable in the upcoming years.

In 2017, CIS maintained a positive operating performance as reflected by a combined ratio of 90.5% and a return on premiums of 16.6%. These results are supported by a continued strong performance of its group life, health and auto businesses. In addition, CIS’ operating performance in personal accidents and surety business lines improved in comparison with the previous year. This was due to improved underwriting supported by a strategic focus on specific niches within personal accidents and government guidelines requiring credit ratings for surety writers. Financial income continues to support CIS’ results while it maintains a sound risk profile; however, the company is not dependent on this revenue 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 to improve the performance of business segments that are deviating from targets.

CIS’ growth was in line with Panama’s insurance industry; however, increasing government infrastructure projects slightly improved the company´s growth with respect to previous year.

Despite the many positive characteristics of CIS, the ratings are still limited by the competitive environment present in its domestic 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 Oct. 13, 2017)

  • Evaluating Country Risk (Version Oct. 13, 2017)

  • Understanding Universal BCAR (Version Oct. 13, 2017)

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: April 7, 2017

  • Date of Financial Data Used: Dec. 31, 2017

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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