Press Release - JULY 17, 2019

AM Best Assigns Credit Ratings to Mercantil Reaseguradora Internacional, S.A.

 Salvador Smith
Financial Analyst
+52 55 1102 2720, ext. 109

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


AM Best has assigned a Financial Strength Rating of B++ (Good) and a Long-Term Issuer Credit Rating of “bbb” to Mercantil Reaseguradora Internacional, S.A. (Mercantil Re) (Panama). The outlook assigned to these Credit Ratings (ratings) is stable.

The ratings reflect Mercantil Re’s balance sheet strength, which AM Best categorizes as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

Mercantil Re is the wholly owned start-up reinsurer of Mercantil Seguros y Reaseguros, S.A., part of Mercantil Group’s international companies controlled by ultimate parent Alvina Corporation, which provides synergies and operating efficiencies. The company was established this year in Panama with the main purpose of supporting group’s regional expansion throughout Latin America.

Balance sheet strength is underpinned by a strong risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), also supported by a well-structured reinsurance program placed with highly rated retrocessionaries, and a conservative investment strategy aimed at providing liquidity and maintaining appropriate asset-liability management. Additionally, the company’s ERM framework is considered appropriate as it benefits from the group’s guidelines and expertise.

In AM Best’s view, Mercantil Re’s operating performance reflects expenses and dependence upon investment income, accordingly to the company’s start-up nature. However, AM Best expects underwriting performance to support profitability in the short term, driven by management’s track record in underwriting practices and a diversified reinsurance structure.

Additionally, Mercantil Re’s limited business profile reflects the company’s execution risk driven by its expansion strategy and a strong competitive environment in its target geographic markets.

Positive factors that might improve the rating level or outlooks include targeted geographic premium distribution with good-quality underwriting, which supports profitability and the very strong balance sheet assessment. Factors that could lead to negative rating actions include adverse financial performance that leads to a significant deterioration in its risk-adjusted capitalization.

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:

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

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

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

  • Understanding Universal BCAR (Version May 23, 2019)

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 Understanding Best’s Credit Ratings.

  • Previous Rating Date: Not rated

  • Date Range of Financial Data Used: Dec. 31, 2013-Dec. 31, 2018

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.

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