CONTACTS:
FOR IMMEDIATE RELEASE
MEXICO CITY - FEBRUARY 10, 2021 12:36 PM (EST)
AM 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 AM 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 its risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), 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 increased geographic diversification through 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 multiline insurer and ranks among the top companies in Panama in terms of premium market share. The company’s largest business lines include health, automobile, miscellaneous, group and individual life insurance. CIS operates through a network of brokers and office branches in several cities throughout Panama.
Historically, CIS has increased its capital base at a 9.0% compound annual growth rate 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. AM Best expects the company’s risk-adjusted capitalization to remain stable.
In 2020, CIS operating performance was characterized by a combined ratio of 87.4% and a return on earned premiums of 21.9%. These results were supported by continued positive performance in its auto, health and group life businesses, which constitute 78% of net earned premium. The company leverages its health segment performance through Blue Cross Blue Shield, a health care provider network in the United States. In addition, CIS’ fire business has improved due to a strategic focus on specific niches, in conjunction with lower reinsurance costs, despite strong competition in this business line that historically has generated losses. 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. 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.
Despite the many positive characteristics of CIS, the ratings are limited by the competitive environment present in its domestic market, as well as AM Best’s perception of country risk in Panama, which has an AM Best country risk tier ranking of CRT-4, the second-highest level in this scale.
AM Best considers CIS to be well-positioned at its current rating levels, and positive rating actions are not expected in the near term. Factors that might lead to negative rating actions include protracted adverse underwriting and overall operating performance, a change in the Blue Cross Blue Shield alliance, a significant deterioration in CIS’ 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 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 www.ambest.com/ratings/methodology .
Key insurance criteria reports utilized:
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.
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.
AM Best receives compensation for interactive rating services provided to organizations that it rates. AM Best may also receive compensation from rated entities for non-rating related services or products offered by AM Best. AM Best does not offer consulting or advisory services. For more information regarding AM Best’s rating process, including handling of confidential (non-public) information, independence, and avoidance of conflicts of interest, please read the AM Best Code of Conduct. 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.
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 London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.