{"id":22215,"date":"2018-02-04T11:18:07","date_gmt":"2018-02-04T16:18:07","guid":{"rendered":"http:\/\/panamaadvisoryinternationalgroup.com\/blog\/?p=22215"},"modified":"2018-02-04T11:18:25","modified_gmt":"2018-02-04T16:18:25","slug":"m-best-affirms-credit-ratings-mapfre-panama-s","status":"publish","type":"post","link":"https:\/\/panamaadvisoryinternationalgroup.com\/blog\/m-best-affirms-credit-ratings-mapfre-panama-s\/","title":{"rendered":"A.M. Best Affirms Credit Ratings of MAPFRE Panam\u00e1 S.A."},"content":{"rendered":"

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A.M. Best <\/b>has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of \u201ca\u201d of MAPFRE Panam\u00e1 S.A. <\/b>(MAPFRE Panam\u00e1) (Panama City, Panama). The outlook of these Credit Ratings (ratings) remains stable.<\/p>\n

The ratings reflect MAPFRE Panam\u00e1\u2019s balance sheet strength, which A.M. Best categorizes as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).<\/p>\n

The ratings reflect MAPFRE Panam\u00e1\u2019s strong risk-adjusted capitalization and geographic importance to MAPFRE S.A.<\/b> (MAPFRE Group) in the Central American market, as well as the integration of the MAPFRE Group\u2019s practices and procedures into MAPFRE Panam\u00e1. The company maintained its market position during 2016 and 2017, and ranked as Panama\u2019s third largest insurer as of November 2017.<\/p>\n

Partially offsetting these positive rating factors are the slow growth in Panama\u2019s insurance industry, competitive dynamics that persist in the property\/casualty segment and uncertainty over underwriting performance of the upcoming compulsory auto insurance in the country.<\/p>\n

MAPFRE Panam\u00e1 is the second largest auto insurer in Panama, and ranks second in the life segment and third in the property\/casualty segment. Panama\u2019s insurance industry has gradually decelerated since 2015, reaching an almost nil growth during 2016 and recovering at a 5% rate as of November 2017. MAPFRE Panam\u00e1 took advantage of the slowing conditions during this period and grew its direct gross written premium 7.2% in 2016 and 11.8% as of September in 2017.<\/p>\n

MAPFRE Panam\u00e1\u2019s solid capital base and good reserve position provide a solid base for financial flexibility and strong risk-adjusted capitalization levels. A.M.Best expects that the ERM practices and procedures implemented from the MAPFRE Group continue to positively affect MAPFRE Panam\u00e1\u2019s future performance.<\/p>\n

MAPFRE Panam\u00e1\u2019s combined ratio as of September 2017 showed a slight recovery. However, going into 2018, A.M. Best will need to assess underwriting performance under the stricter implementation of compulsory auto insurance in Panama and how the company approaches that segment.<\/p>\n

The strong competitive environment in Panama\u2019s insurance market, especially in segments in which MAPFRE Panam\u00e1 has leading positions, continues to generate soft market conditions and increase risk appetites across the industry, presenting operating performance challenges in specific segments such as auto, individual life and health.<\/p>\n

A.M. Best considers MAPFRE Panam\u00e1 to be well-positioned at its current rating level. Positive rating actions could occur if the company is able to improve its technical income and achieve its growth targets, while maintaining its strong risk adjusted capitalization, as measured by Best\u2019s Capital Adequacy model.<\/p>\n

Negative rating actions could result from a significant reduction in MAPFRE Panam\u00e1\u2019s risk-adjusted capitalization, either by constant deterioration in its underwriting performance or unexpected losses that render this measure to a level that no longer supports the current ratings, or if the company deviates significantly from the policies, practices and benefits assumed from its association with MAPFRE Group. Additionally, negative rating actions at its ultimate parent could lead to a downgrade of MAPFRE Panam\u00e1 ratings.<\/p>\n

The methodology used in determining these ratings is Best\u2019s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best\u2019s rating process and contains the different rating criteria employed in the rating process. Best\u2019s Credit Rating Methodology can be found at www.ambest.com\/ratings\/methodology<\/a>.<\/p>\n

Key insurance criteria reports utilized:<\/p>\n