Best’s News & Research Service - March 31, 2015 01:51 PM (EDT)
A.M. Best Affirms Ratings of Compañía Internacional de Seguros, S.A.
- March 31, 2015 01:51 PM (EDT)
Mexico City //BestWire// - A.M. Best has affirmed the financial strength rating of A (Excellent) and the issuer credit rating of "a" of Compañía Internacional de Seguros, S.A. (CIS) (Panama City, Panama). The outlook for both ratings is stable.
The ratings reflect CIS' excellent risk-adjusted capitalization, historically positive technical and bottom line results, its leading position within the Panamanian insurance marketplace, its strong reinsurance program and its 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, which A.M. Best considers to have an elevated level of country risk (CRT-4).
In 2014, CIS was able to maintain its positive operating performance with a combined ratio of 89.3% and a return on premiums of 17.7%. These results are largely boosted by the strong performance of its group life and health business, which performed exceptionally during 2014. Financial income continues to support CIS' results with a healthier risk profile due to its liquid position; however, the company is not dependent on these revenues in order to achieve positive bottom line results. In its property/casualty portfolio, CIS is underperforming in its fire and auto businesses. This is mainly derived from strong competition in these business lines. Although the overall performance of the company is strong, the company constantly reviews its underwriting guidelines in order to improve the performance of business segments that are deviating from target.
CIS' growth was slightly above that of the Panamanian insurance industry. The company is able to achieve this growth given its leading position in most of the lines it operates and its brand recognition within Panama. CIS' capitalization is very strong and is expected to remain stable in upcoming years. Although the implementation of the International Financial Reporting Standards (IFRS) brought some adjustments to the asset base and shareholders surplus, the company still achieves strong Best Capital Adequacy Ratios that are well in line with its rating level.
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. Positive factors that might improve the current rating level or outlook include improvements in Panama's risk profile in hand 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 and/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
- Evaluating Country Risk
- Rating Members of Insurance Groups
- Risk Management and the Rating Process for Insurance Companies
- Understanding Universal BCAR
Click here for 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.
- Previous Rating Date: Mar. 14, 2014
- Date of Financial Data Used: Dec. 31, 2014
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