A.M. Best Affirms Ratings of Mapfre Panama, SA

A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) and issuer credit rating of "a-" of Mapfre Panama, SA (Mapfre Panama) (Panama). The outlook for both ratings is stable.

The ratings reflect Mapfre Panama's solid capitalization, consistent overall earnings, generally favorable underwriting performance and local market expertise. Mapfre Panama operates as a composite insurer of life and non-life business and remains one of the three largest domestic insurance companies in Panama.

The company's favorable underwriting results and investment income have resulted in consistent overall earnings, which have led to organic surplus growth in recent years. This has enabled Mapfre Panama to continue to enhance its surplus position and maintain more than adequate risk-adjusted capitalization for its current business profile. In addition, as a subsidiary of MAPFRE SA, Mapfre Panama benefits from group synergies, as well as access to MAPFRE SA's considerable global resources, including financial, operational and intellectual expertise, and this complements its already well-established local market proficiencies.

Partially offsetting these favorable rating factors is the geographic concentration of Mapfre Panama's operations, the increasingly competitive market environment in which the company operates and its reliance on reinsurance as a catastrophe risk mitigation strategy.

While Mapfre Panama's ratings are stable, factors that could contribute to positive rating actions include continued strong underwriting performance and overall profitability, as well as an upgrade in Panama's country risk tier rating.

Factors that may lead to negative rating actions include a significant loss of the company's market share, sustained decline in its underwriting profitability, significant deterioration in risk-adjusted capitalization as measured by Best's Capital Adequacy Ratio (BCAR) and a downgrade in Panama's country risk tier rating.

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. Key criteria utilized include: "Risk Management and the Rating Process for Insurance Companies"; "Understanding BCAR for Property/Casualty Insurers"; "Understanding Universal BCAR"; "Catastrophe Analysis in A.M. Best Ratings"; and "Evaluating Country Risk." Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2012 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.

Contacts:

A.M. Best Co.
Ricardo Longchallon, 908-439-2200, ext. 5676
Senior Financial Analyst
[e-mail]
or
Peter Dickey, 908-439-2200, ext. 5053
Assistant Vice President
[e-mail]
or
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
[e-mail]
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
[e-mail]