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FOR IMMEDIATE RELEASE
MEXICO CITY - OCTOBER 14, 2021 12:48 PM (EDT)
AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a+” (Excellent) of MAPFRE Panamá S.A. (MAPFRE Panamá) (Panama City, Panama). The outlook of these Credit Ratings (ratings) is stable.
MAPFRE Panamá is a member of the MAPFRE S.A., which on a consolidated basis has a balance sheet strength that AM Best assesses as very strong, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management (ERM).
The ratings reflect MAPFRE Panamá’s geographic and strategic importance to the MAPFRE group, given its Central America presence, as well as the integration of the MAPFRE group’s practices, procedures, reinsurance, draft facilities, underwriting selection and ERM framework into MAPFRE Panamá, and the synergies and operating efficiencies derived from being a group member. MAPFRE Panamá was Panama’s second-largest insurer in 2020. Partially offsetting these positive rating factors are the competitive dynamics that persist in Panama’s property/casualty (P/C) segment.
MAPFRE Panamá led Panama’s health insurers and ranked third in the country’s auto insurance segment. While Panama’s insurance industry showed signs of contraction during 2020, MAPFRE Panamá grew over 12% during this period; this occurred after posting marginal growth in 2019. This period followed a 2.8% year-over-year decline in 2018, driven by increasing competition in the bancassurance sector, which impacted the company’s assumed reinsurance business. Business growth in 2020 was partially sustained through successful client retention in its auto line in conjunction with an increased profile for health coverage.
MAPFRE Panamá’s strongest level of risk-adjusted capitalization, as measured on a consolidated basis by Best’s Capital Adequacy Ratio (BCAR), solid capital base and good reserve position provide a sound financial flexibility. AM Best expects the company to sustain its capitalization level, in addition to ERM practices and procedures implemented from the MAPFRE group. This should continue to influence MAPFRE Panamá’s future performance positively.
MAPFRE Panamá’s combined ratio for 2020 improved to 92.4% due to its lower loss ratio, as underwriting, mainly in the health and auto business lines, continue to be adjusted to reflect its risk experience, in addition to pandemic inactivity positively impacting its P/C lines of business. Given the volatility in 2021 in auto and health, AM Best expects MAPFRE Panama to sustain technical results through strict claims and expense containment strategies. Administrative and acquisition expenses have remained 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.
If there are negative rating actions on the MAPFRE group, as a result of a sustained decline in operating performance below AM Best’s expectation for the strong assessment level, or a sustained deterioration in MAPFRE S.A.’s consolidated risk-adjusted capitalization, the ratings of MAPFRE Panamá would mirror those same actions.
A change in AM Best’s perception regarding the actual or perceived level of MAPFRE Panamá’s strategic importance to the MAPFRE group also could impact the company’s ratings.
The methodology used in determining these ratings is Best’s Credit Rating Methodology (Version Nov. 13, 2020), 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:
The following applied criteria supplemented the analysis of the ultimate rating unit:
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.
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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 London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.