Best’s News & Research Service - March 29, 2023 04:44 PM (EDT)
AM Best Assigns Credit Ratings to Interamericana de Fianzas y Seguros, S.A.
- March 29, 2023 04:44 PM (EDT)
Mexico City //BestWire// - AM Best has assigned a Financial Strength Rating of B+ (Good) and a Long-Term Issuer Credit Rating of “bbb-” (Good) to Interamericana de Fianzas y Seguros, S.A. (IFS) (Panama). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect IFS’ balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
The stable outlooks reflect AM Best’s expectation that the company will maintain its overall balance sheet strength assessment at the very strong level, supported by risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). In addition, ongoing strategic initiatives implemented by IFS’ management will help it maintain stable operating performance over the intermediate term and build its presence in Panama’s market.
IFS was incorporated in August 2020 and is licensed to operate in Panama’s general insurance branches, as well as surety and individual lines of business. The company is based in Panama City, Panama. IFS develops its business inside Panama and has a diversified portfolio mainly focused in surety, in addition to property/casualty and life business. As of January 2023, IFS ranked as the country’s 17th largest insurer based on its 1.11% market share of overall premiums. IFS is Panama’s second largest surety writer with an 18.2% share of premiums.
IFS’ very strong balance sheet strength assessment is based on its strongest level of risk-adjusted capitalization, as measured by BCAR, its conservative investment portfolio allocated mainly in Panama government bonds, solid liquidity measures that are enhanced by generally positive underwriting, and operating cash flows, as reflected by a return-on-equity ratio of 2.0% in 2022.
The company has shown profitability since its inception, which is driven by improvements in its underwriting performance as reflected by premium sufficiency over the past two years. AM Best expects IFS to stabilize its operating performance in the following years while maintaining positive bottom-line results.
IFS’ ERM practices are considered appropriate, as these were built in reference to the framework COSO Report 2013, 2017 and are well-integrated into its operations. The company has a sound reinsurance program in place with reinsurers that are highly rated.
Negative rating actions could take place if there is a deterioration in the company’s risk-adjusted capitalization due to major capital outflows or a negative impact to its operating performance due to a large increase in claims or cost structure. Negative rating actions also could occur if volatility in the company’s performance ratios and accelerated growth remain without supporting capital in the short to intermediate term.
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:
- Available Capital & Holding Company Analysis (Version Oct. 13, 2017)
- Evaluating Country Risk (Version Oct. 13, 2017)
- Scoring and Assessing Innovation (Version Feb. 27, 2023)
- Understanding Global BCAR (Version June 30, 2022)
- Rating New Company Formation (Sept. 9, 2022)
- Rating Surety Companies (Apr 7, 2021)
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.
- Previous Rating Date: Not Rated
- Date Range of Financial Data Used: Dec. 31, 2020-Dec. 31, 2022
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.