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A.M. Best Upgrades Issuer Credit Rating of Chubb Seguros Panama S.A.A.M. Best has upgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to "a+" from "a" and affirmed the Financial Strength Rating (FSR) of A (Excellent) of Chubb Seguros Panama S.A. (Chubb Panama) (Panama). The outlook of these Credit Ratings (ratings) remains stable. The upgrade of the Long-Term ICR reflects Chubb Panama's continued strong risk-adjusted capitalization, its diversified business profile, a solid reinsurance program placed with Chubb Tempest (News - Alert) Reinsurance Ltd. and the company's affiliation to its ultimate parent, Chubb Limited, one of the world's biggest insurance groups. This affiliation provides Chubb Panama synergies and operating efficiencies. Offsetting these positive factors are Chubb Panama's modest, but growing market share within Panama's insurance industry relative to the lines it writes, and the strong competitive environment in Panama's insurance sector; however, the company partially mitigates this through a diversified business portfolio spread across other geographies. Chubb Panama 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 Panama S.A. The company writes mainly non-life and reinsurance business covering exposures throughout Latin America. In 2016, miscellaneous insurance was the company's top performing business line and currently represents 21% of gross written premiums. The company's main distribution channels are positioned with brokers. Chubb Panama has shown disciplined underwriting in a highly competitive market, consistently reporting overall premium sufficiency levels that compare positively with its competitors. In 2016, under soft market conditions that stalled growth and non-recurring events such as new office expenses, Chubb Panama´s underwriting profile achieved a combined ratio of approximately 60%. Chubb Panama's risk-based capitalization remains fully supportive of its current ratings, as measured by Best's Capital Adequacy Ratio (BCAR). The Panamanian 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 24% in 2016. Moreover, the company benefits from being integrated into the group, gaining operational leverage through the same systems, procedures and enterprise risk management practices. The group historically has demonstrated its support to Chubb Panama through capital injections to fund growth opportunities. Key rating factors that could lead to positive rating actions for Chubb Panama 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 capitalization, as measured by BCAR model, could lead to negative rating actions. Additionally, if A.M. Best determines that Chubb Panama´s strategic importance to its group diminishes, the ratings could also be downgraded. The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explaation 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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