AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of "a+" of MAPFRE Panamá S.A. (MAPFRE Panamá) (Panama City, Panama). The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect MAPFRE Panamá’s balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The ratings reflect MAPFRE Panamá’s strong risk-adjusted capitalization, the geographic and strategic importance of its Central America presence to Spain’s leading insurer, MAPFRE S.A. (MAPFRE Group), the integration of the MAPFRE Group’s practices and procedures into MAPFRE Panamá, as well as the synergies and operating efficiencies derived from being a group member. MAPFRE Panamá maintained its market position in 2019, having ranked as Panama’s third-largest insurer in 2019. Partially offsetting these positive rating factors are the competitive dynamics that persist in Panama’s property/casualty (P/C) segment despite healthier growth rates.
MAPFRE Panamá ranked second among Panama’s health insurers and third in the country’s auto and P/C segments. While Panama’s insurance industry showed signs of contraction in 2019, MAPFRE Panamá grew 3.7% during this period, after recovering from 2.8% decline in 2018. Fluctuations in growth are explained by a material decrease in assumed reinsurance business led by the growing competition from the bancassurance sector in 2018.
MAPFRE Panamá’s solid capital level and good reserve position provide a solid base for financial flexibility and strong risk-adjusted capitalization levels. AM Best expects that the company’s ERM practices and procedures implemented from the MAPFRE Group will continue to affect MAPFRE Panamá’s future performance positively.
MAPFRE Panamá’s combined ratio for 2019 improved to 95.3% due to lower loss ratio, as underwriting, mainly in the health and automobile business lines, was adjusted to reflect its risk experience. Administrative and acquisition expenses have remained stable and well-contained.
The strong competitive environment in Panama’s insurance market, especially in segments in which MAPFRE Panamá has leading positions, continues to generate challenging conditions and has increased risk appetites across the industry, presenting operating performance challenges in specific segments such as auto, individual life and health.
Positive rating actions taken on its ultimate parent, MAPFRE S.A., also could result in further positive rating actions for MAPFRE Panamá. Negative rating actions could result from a significant reduction in MAPFRE Panamá’s risk-adjusted capitalization, either by constant deterioration in its underwriting performance or unexpected losses that result in 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 Panamá ratings.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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