MAY 14, 2020 12:07:54 Eastern Daylight Time

AM Best Affirms Credit Ratings of Instituto Nacional de Seguros

 Olga Rubo, FRM
Financial Analyst
+52 55 1102 2720, ext. 134

Alfonso Novelo
Senior Director, Analytics
+52 55 1102 2720, ext. 107

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644


MEXICO CITY - MAY 14, 2020 12:07:54 Eastern Daylight Time
AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Instituto Nacional de Seguros (INS) (San Jose, Costa Rica). The outlook of these Credit Ratings (ratings) remains positive.

The ratings reflect INS’ 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).

AM Best is maintaining the positive outlook to reflect the still-favorable operating performance metrics posted in recent years, as well as the company’s continuous and successful adaptation to the environment in which it operates.

INS’ assessed risk-adjusted capitalization level of strongest, as measured by Best’s Capital Adequacy Ratio (BCAR), is supported by a comprehensive and adequate reinsurance program, solid operating performance and its position as the leading insurer in Costa Rica. The assessment of INS’ business profile considers the characteristics of Costa Rica’s market, derived from the country’s Insurance Law of 2008, and includes INS’ robust market share and the guarantee provided by the Costa Rican government to support INS’ domestic obligations.

INS is Costa Rica’s largest insurer with a market share of 72%, as of December 2019. The company has exclusivity on underwriting compulsory workers’ compensation and mandatory auto insurance. INS’ compulsory premium segment represents 36% of its business portfolio and 26% of the industry’s total premiums written.

The positive outlooks on INS’ ratings reflect the operating performance metrics posted in 2019, despite some deterioration in 2018, as shown in larger loss and combined ratios. As of December 2019, INS’ gross written premiums showed a year-over-year increase of 7.5%, mainly driven by compulsory workers’ compensation, in line with an improvement in the economic activity of Costa Rica’s insurance sector. Overall, INS produced positive net income. The outlook could be revised to stable should INS’ 2020 operating performance results deteriorate to levels more in line with an adequate operating performance assessment.

Investment income, based on a conservative investment portfolio, has benefited from interest rates and a prudent diversification strategy, and remains supportive of the company’s performance. Net income stood at USD 108 million at year-end 2019, providing a solid growth for its capital base, despite the compulsory 25% dividend paid to the government and a larger reserve creation derived from the favorable performance of the compulsory workers’ compensation segment.

AM Best expects INS to continue improving and consolidating its business guidelines by implementing its geographical diversification strategy progressively, which should offset increased competition in the voluntary segments. The company is in a good position to maintain its strongest risk-adjusted capitalization, as measured by BCAR, due to its good profitability, appropriate ERM practices and adequate reinsurance with highly rated international reinsurers, which provides a buffer for variations in claim severity and catastrophic events.

Positive rating movements could occur if INS is able to improve or maintain its underwriting performance and operating efficiency while continuing to pursue further diversification of its revenue, along with improving its return metrics and maintaining its strongest risk adjusted capitalization. Negative rating actions could occur if technical results deteriorate or if net income declines, given any loss that significantly affects the company’s profitability and/or capital base to levels that are no longer supportive of the current ratings.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of AM Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at

Key insurance criteria reports utilized:

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

  • Understanding Universal BCAR (Version May 23, 2019)

  • Catastrophe Analysis in AM Best Ratings (Version Oct. 13, 2017)

  • Available Capital & Holding Company Analysis (Version Oct. 13, 2017)

  • Scoring and Assessing Innovation (Version March 5, 2020)

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 Guide to Best’s Credit Ratings.

  • Previous Rating Date: April 17, 2019

  • Date Range of Financial Data Used: Dec. 31, 2013-Dec. 31, 2019

This press release relates to rating(s) that have been published on AM 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 AM Best’s Recent Rating Activity web page.

AM 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. AM Best does not audit the company’s financial records or statements, or otherwise independently verify the accuracy and reliability of the information; therefore, AM Best cannot attest as to the accuracy of the information provided.

AM Best’s credit ratings are independent and objective opinions, not statements of fact. AM 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. AM 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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AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.

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AMB# Company Name
086238 Instituto Nacional de Seguros