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

MEXICO CITY–(BUSINESS WIRE)–A.M. Best has affirmed the Financial Strength Rating of A(Excellent) and the Long-Term Issuer Credit Rating of “a” of MAPFREPanamá S.A. (MAPFRE Panamá) (Panama City, Panama). The outlook ofthese Credit Ratings (ratings) remains stable.

The ratings reflect MAPFRE Panamá’s strong risk-adjusted capitalizationand geographic importance to MAPFRE S.A. (MAPFRE Group) in theCentral American market, as well as the integration of the MAPFREGroup’s practices and procedures into MAPFRE Panamá. The companyimproved its market position during 2015 and 2016 and ranked as Panama’ssecond largest insurer as of November 2016.

Offsetting these positive rating factors are the upward trend in thecompany’s loss ratio, the slow growth in Panama’s insurance industry andthe competitive dynamics that persist in MAPFRE Panamá’s main businesssegments.

MAPFRE Panamá is the second-largest insurer in Panama’s life segment andthe country’s third largest property/casualty writer. Panama’s insuranceindustry has gradually decelerated since 2015, finally reaching analmost nil growth during 2016. MAPFRE Panamá took advantage of theslowing conditions during this period and grew its business by 20.5%during 2015 and 7.2% in 2016.

MAPFRE Panamá’s solid capital base and good reserve position provide asolid base for financial flexibility and strong risk-adjustedcapitalization levels. Enterprise risk management practices andprocedures from the MAPFRE Group have been implemented; A.M. Bestexpects that these measures will continue to positively affect thecompany’s future performance.

Year-end 2015 and 2016 results show an upward trend in the company’sloss ratio due to its expansion efforts, negative market conditions foraccidents and health given the high medical inflation rate faced byinsurers, and by low investment yields used to support benefits paid onguaranteed rate life products. Net income for the company during 2016remained at a similar level to 2015, mainly due to a significant releaseof long term provisions and consistent net investment income.

The strong competitive environment in Panama’s insurance market,especially in segments where MAPFRE Panamá has leading positions,continues to generate soft market conditions and increase risk appetitesacross the industry, presenting operating performance challenges inspecific segments such as health and auto.

A.M. Best considers MAPFRE Panamá to be well-positioned at its currentrating level. Positive rating actions could occur if the company is ableto reverse the negative trend in underwriting quality and sustain it tofurther enhance its technical income, while consistently increasing itscapital base. Additionally, positive rating actions at its ultimateparent could lead to improvements in MAPFRE Panamá ratings.

Negative rating actions could result from a significant reduction inMAPFRE Panamá’s risk-adjusted capitalization, either by constantdeterioration in its underwriting performance or unexpected losses thatrender this measure to a level that no longer supports the currentratings, or if the company deviates significantly from the policies,practices and benefits assumed from its association with MAPFRE Group.Additionally, negative rating actions at its ultimate parent could leadto a downgrade of MAPFRE Panamá ratings.

The methodology used in determining these ratings is Best’s CreditRating Methodology, which provides a comprehensive explanation of A.M.Best’s rating process and contains the different rating criteriaemployed in the rating process. Best’s Credit Rating Methodology can befound at

Key insurance criteria reports utilized:

Analyzing Insurance Holding Company Liquidity (Version March 25, 2013)

Catastrophe Analysis in A.M. Best Ratings (Version Nov. 3, 2011)

Evaluating Country Risk (Version May 2, 2012)

Insurance Holding Company and Debt Ratings (Version May 6, 2014)

Rating Members of Insurance Groups (Version Dec. 15, 2014)

Risk Management and the Rating Process for Insurance Companies(Version April 2, 2013)

Understanding Universal BCAR (Version April 28, 2016)

View a general description of the policiesand procedures used to determine credit ratings. For information onthe meaning of ratings, structure, voting and the committee process fordetermining the ratings and monitoring activities, please refer to “UnderstandingBest’s Credit Ratings.”

Previous Rating Date: Jan. 13, 2016

Date of Financial Data Used: Dec. 31, 2016

This press release relates to rating(s) that have been published onA.M. Best’s website. For additional rating information relating to therelease and pertinent disclosures, including details of the officeresponsible for issuing each of the individual ratings referenced inthis release, please see A.M. Best’s RecentRating Activity web page.

A.M. Best does not validate or certify the information provided bythe client in order to issue a credit rating.

While the information obtained from the material source(s) isbelieved to be reliable, its accuracy is not guaranteed. A.M. Best doesnot audit the company’s financial records or statements, or otherwiseindependently verify the accuracy and reliability of the information;therefore, A.M. Best cannot attest as to the accuracy of the informationprovided.

A.M. Best’s credit ratings are independent and objective opinions,not statements of fact. A.M. Best is not an Investment Advisor, does notoffer investment advice of any kind, nor does the company or its RatingsAnalysts offer any form of structuring or financial advice. A.M. Best’scredit opinions are not recommendations to buy, sell or hold securities,or to make any other investment decisions. View our entirenotice for complete details.

A.M. Best receives compensation for interactive rating servicesprovided to organizations that it rates. A.M. Best may also receivecompensation from rated entities for non-rating related services orproducts offered by A.M. Best. A.M. Best does not offer consulting oradvisory services. For more information regarding A.M. Best’s ratingprocess, including handling of confidential (non-public) information,independence, and avoidance of conflicts of interest, please read the A.M.Best Code of Conduct.

A.M. Best is the world’s oldest and most authoritative insurancerating and information source. For more information, visit

Copyright © 2017 by A.M. Best Rating Services, Inc. and/or itssubsidiaries. ALL RIGHTS RESERVED.

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