Best’s News & Research Service - October 30, 2025 11:41 AM (EDT)
AM Best Affirms Credit Ratings of Mercantil Seguros y Reaseguros, S.A.
- October 30, 2025 11:41 AM (EDT)
//BestWire// - AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” (Good) of Mercantil Seguros y Reaseguros, S.A. (Mercantil Seguros) (Panama). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Mercantil Seguros’ balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
The stable outlooks reflect Mercantil Seguros’ capacity to maintain profitable metrics that strengthen and protect its capital base.
Mercantil Seguros is a Panama-based (re)insurer established in 2013, with gross premiums written mainly composed of health, which represents 90% of the portfolio, with the remaining risk distributed among property/casualty (P/C) lines of business. The company, which is part of Mercantil Group’s international companies and controlled by ultimate parent, Mercantil Servicios Financieros Internacional, S.A. (MSFI), operates in Panama through a network of brokers and direct distribution channels. Mercantil Seguros also serves as a retrocessionaire for reinsurance business sourced in Venezuela, driven by reinsurance brokers. At the same time, Mercantil Seguros’ size is relatively small among its Panama-domiciled peers.
Mercantil Seguros’ balance sheet strength is underpinned by its risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The strongest assessment also reflects the company’s well-structured reinsurance program among counterparties of strong credit quality, sound underwriting practices and conservative investment strategy. The company has consistently increased its capital, supported by positive bottom-line results and driven by a consistent inflow of underwriting and investment income.
Mercantil Seguros has shown sound underwriting practices, characterized by overall premium sufficiency levels. Additionally, consistent reinsurance profits, which help offset acquisition costs, continue to support the company´s profitability.
AM Best expects Mercantil Seguros’ current geographic diversification to further improve through distribution channel synergies provided by the overall organization in the near to midterm, enabling Mercantil Seguros to expand its Panama-sourced business while diminishing dependence on its Venezuelan-sourced business.
Factors that could lead to negative rating actions include deterioration of the group’s revenue or financial leverage at MSFI, hindering the group’s ability to service its debts and putting pressure on the financial strength of the insurance entities. Adverse underwriting performance that leads to a significant deterioration in Mercantil Seguros’ risk-adjusted capitalization, or political turmoil that affects Venezuela-sourced business, also could drive negative rating actions. While unlikely in the medium term, a factor that could result in positive rating actions is improvement in the credit profile of the group, as a result of sustained profitability strengthening the group’s capital base.
The methodology used in determining these ratings is Best’s Credit Rating Methodology (Version Aug. 29, 2024), 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:
- Evaluating Country Risk (Version June 6, 2024)
- Understanding Global BCAR (Version Sept. 18, 2025)
- Catastrophe Analysis in AM Best Ratings (Version Feb. 8, 2024)
- Available Capital and Insurance Holding Company Analysis (Version Sept. 18, 2025)
- Scoring and Assessing Innovation (Version Feb. 20, 2025)
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, relevant sources of information and the frequency for updating ratings, please refer to Guide to Best’s Credit Ratings.
- Previous Rating Date: Nov. 8, 2024
- Initial Rating Date: July 17, 2019
- Date Range of Financial Data Used: Dec. 31, 2019-June 30, 2025
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