AM Best Affirms Credit Ratings of MAPFRE Panamá S.A.

OCTOBER 17, 2024 10:26 AM (EDT)

AM Best Affirms Credit Ratings of MAPFRE Panamá S.A.

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FOR IMMEDIATE RELEASE

MEXICO CITY - OCTOBER 17, 2024 10:26 AM (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 MAPFRE S.A., which on a consolidated basis has a balance sheet strength that AM Best assesses as very strong, as well as strong operating performance, a 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 third-largest insurer in 2023. Partially offsetting these positive rating factors are the competitive dynamics that persist in Panama's property/casualty segment.

MAPFRE Panamá ranks among the top companies in Panama's health and surety insurance segments.

The ratings also reflect MAPFRE Panamá's strongest level of risk-adjusted capitalization, as measured by Best's Capital Adequacy Ratio (BCAR) on a consolidated basis, solid capital base and good reserve position that provides a sound financial flexibility. AM Best expects the company to sustain its capitalization level, in addition to its adherence to ERM practices and procedures implemented from the MAPFRE group.

MAPFRE Panamá's combined ratio has been deteriorating since 2021, driven by its health and auto business lines that were impacted by claims frequency in conjunction with rising inflation. However, MAPFRE Panamá has resumed positive technical results as of 2Q 2024 through its ongoing strict claims and expense containment strategies, in conjunction with improvements in life business.

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 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 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:

· Available Capital and Insurance Holding Company Analysis (Version Aug. 15, 2024)

· Catastrophe Analysis in AM Best Ratings (Version Feb. 8, 2024)

· Evaluating Country Risk (June 6, 2024)

· Scoring and Assessing Innovation (Feb. 27, 2023)

· Understanding Global BCAR (Version Aug. 1, 2024)

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: Oct. 18, 2023

· Initial Rating Date: Nov. 2, 2007

· Date Range of Financial Data Used: Dec. 31, 2018- May. 31, 2024

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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.