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FOR IMMEDIATE RELEASE
MEXICO CITY - AUGUST 23, 2018 03:10 PM (EDT)
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 Chubb Seguros Panamá S.A. (Chubb Panamá) (Panamá).
The ratings reflect Chubb Panamá’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The revised outlooks to positive reflect Chubb Panamá´s sound underwriting practices, which supports its consistent operating performance. The company´s balance sheet strength continues to be supported by risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR) and a solid reinsurance program placed with Chubb Tempest Reinsurance Ltd., as well as the company’s affiliation to its ultimate parent, Chubb Limited, one of the world’s largest insurance groups, and its diversified business profile. The affiliation provides Chubb Panamá synergies and operating efficiencies. Offsetting these positive rating factors are Chubb Panamá’s modest, but growing market share within Panamá’s insurance industry relative to the lines of business it writes, and the strong competitive environment in Panamá’s insurance sector; however, the company partially mitigates this through a diversified business portfolio spread across other geographies.
Chubb Panamá initiated operations in 2008 as ACE Seguros S.A., and continued with that brand name until 2016 when its name was changed to Chubb Seguros Panamá S.A. The company writes mainly non-life and reinsurance business, covering exposures throughout Latin America. In 2017, fire insurance was the company’s top performing business line and currently represents 36% of gross written premiums. The company’s main distribution channels are positioned with brokers. Chubb Panamá has shown disciplined underwriting in a highly competitive market, consistently reporting overall premium sufficiency levels that compare positively with its competitors. In 2017, Chubb Panamá achieved a combined ratio of approximately 56%.
Chubb Panamá’s risk-based capitalization remains fully supportive of its current ratings, as measured by BCAR. The Panamá subsidiary is mainly susceptible to underwriting risk given growth in premiums; however, the company’s strong underwriting results maintain sound overall profitability metrics, reflected in a return on equity of 27.8% in 2017. Moreover, the company benefits from being integrated into the group, gaining operational leverage through the same systems, procedures and ERM practices. The group historically has demonstrated its support to Chubb Panamá through capital injections to fund growth opportunities.
Key factors that could lead to positive rating actions for Chubb Panamá include continued favorable trends in profitability and capital growth supported by good underwriting practices. Conversely, a sharp deterioration in operating performance or a significant weakening of its risk-adjusted capitalization could lead to negative rating actions. Additionally, if A.M. Best determines that Chubb Panamá ´s strategic importance to its group diminishes, the ratings also could be downgraded.
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:
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.
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