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Best’s News & Research Service - April 27, 2018 11:39 AM (EDT)

A.M. Best Revises Outlooks to Positive for Instituto Nacional de Seguros

  • April 27, 2018 11:39 AM (EDT)
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Mexico City //BestWire// - A.M. Best has revised the outlooks to positive from stable and 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 ratings reflect INS’s balance sheet strength, which A.M. Best categorizes as strongest, as well as its adequate operating performance, neutral business profile and adequate enterprise risk management (ERM).

INS’ strongest capitalization is supported by a comprehensive and adequate reinsurance program, improved operating performance and its position as the leading insurer in Costa Rica. The assessment of its business profile considers INS’ market characteristics derived from the country’s Insurance Law of 2008, including its robust market share and the guarantee provided by the Costa Rican government to support INS’ domestic obligations.

INS is the largest insurer in Costa Rica with a market share of 75% as of December 2017. Market share has decreased due to the aggressive growth of voluntary products from specific market participants. The company has exclusivity on underwriting compulsory workers’ compensation and mandatory auto insurance. INS’ compulsory premium segment represents 33% of its business portfolio and 25% of the industry’s total premiums written.

The positive outlooks on the ratings reflect INS’ adequate underwriting and its short-term prospects. As of December 2017, INS improved its underwriting quality by restructuring its product offering and adjusting its underwriting standards for certain lines; this reduced its 2017 combined ratio to 87.8%, down from 94.2% in 2016. Investment income has remained supportive of the company’s performance, based on a conservative investment portfolio. Net income stood at USD 102.7 million, providing a solid growth for its capital base, despite the compulsory 25% dividend paid to the government.

A.M. 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 strong risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio, due to its good profitability and 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 continue its positive trend in underwriting performance and operating efficiency while achieving significant geographical diversification, improving its return metrics and maintaining its strong capitalization. Negative rating actions could occur if technical results deteriorate or there is a reduction in net income, or any loss that significantly affects the company’s profitability and capital generation.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. 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 Oct. 13, 2017)

  • Understanding Universal BCAR (Version Oct. 13, 2017)

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

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

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: April 27, 2017.

  • Date of Financial Data Used: Dec 31, 2017.

This press release relates to rating(s) that have been published on A.M. 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 A.M. Best’s http://www.ambest.com/ratings/index.html" target="_blank">Recent Rating Activity web page.

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

A.M. Best’s credit ratings are independent and objective opinions, not statements of fact. A.M. 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. A.M. 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.

A.M. Best receives compensation for interactive rating services provided to organizations that it rates. A.M. Best may also receive compensation from rated entities for non-rating related services or products offered by A.M. Best. A.M. Best does not offer consulting or advisory services. For more information regarding A.M. Best’s rating process, including handling of confidential (non-public) information, independence, and avoidance of conflicts of interest, please read the A.M. Best Code of Conduct. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source.



Financial Strength Latin America Press Release A.M. Best Rating Services, Inc. Insurance Issuer Credit Rating Best's Credit Rating Action Rating Event


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