MEXICO CITY–(BUSINESS WIRE)–AM Best has removed from under review with developing
implications and affirmed the Financial Strength Rating (FSR) of A
(Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of
“a” of ASSA Compañía de Seguros S.A. (ASSA) (Panama City, Panama). The
outlook assigned to these Credit Ratings (ratings) is stable. AM Best
also has affirmed the FSR of A- (Excellent) and the Long-Term ICRs of
“a-” of Lion Reinsurance Company Limited (Lion Re) (Bermuda) and
Reaseguradora America SPC Ltd. (RAM Re) (Cayman Islands). The outlook of
these ratings remains stable. All companies are subsidiaries of ASSA
Compañía Tenedora S.A. (ASSA Tenedora) and are owned ultimately by Grupo
ASSA, S.A. (Grupo ASSA), a financial services holding company publicly
traded on the Panama Stock Exchange.
The ratings of ASSA reflect its balance sheet strength, which AM Best
categorizes as strongest, as well as its adequate operating performance,
favorable business profile and appropriate enterprise risk management
(ERM).
The ratings of Lion Re reflect its balance sheet strength, which AM Best
categorizes as strong, as well as its adequate operating performance,
neutral business profile and appropriate ERM.
The ratings of RAM Re reflect its balance sheet strength, which AM Best
categorizes as strong, as well as its adequate operating performance,
neutral business profile and appropriate ERM.
ASSA’s ratings were placed under review with negative implications
following the Aug. 7, 2017, announcement that ASSA had entered into an
asset purchase agreement to fully acquire Assicurazioni Generali S.p.A.
(Generali) insurance operations in Panama. At that time, there were
concerns about the financing structure of the acquisition, and its
effect on the ASSA’s risk-adjusted capitalization and the financial
leverage that could arise from the operation.
On April 12, 2018, the implications of the under review status were
revised to developing, after the transaction’s financial structure was
defined and its potential impact on risk-adjusted capitalization was
revised, rendering results in terms of balance sheet strength, business
profile and operating performance that were appropriate for the current
rating. However, implementation risk and financial leverage at the
company remained ongoing concerns at that time.
The under review status has been removed and ratings have been affirmed,
as the company was able to meet its growth target, while maintaining
underwriting quality, profitability and good capital management that
allowed risk-adjusted capitalization to remain at supportive levels for
the ratings. Additionally, the company has been able to maintain an
adequate financial leverage by repaying most of the financing used in
the transaction.
The stable outlooks reflect the stability of the capital, even with the
intangibles created after acquiring Generali’s business. The outlooks
also reflect AM Best’s expectation of the continued performance of the
company, in terms of underwriting, profitability, capital management and
importance within Panama’s insurance market.
Positive rating actions could take place if the company is able to
continue to grow its capital base, while at the same time maintaining
its operating performance. Additionally, the quality of assets remains a
key component of AM Best’s evaluation, as any deterioration could impact
the company’s risk-adjusted capitalization.
Negative rating actions could occur if the company is not able to
support its risks through its level of capital, especially given the
high intangibles present because of the transaction with Generali. If
asset quality deteriorates without any additional capital, risk-adjusted
capitalization could become affected, which would then potentially
affect the ratings of the company.
Lion Re has continued to post adequate operating performance from its
affiliated insurance companies in the region and from new strategic
business alliances, while maintaining very strong risk-adjusted
capitalization. The company continues to support ASSA Tenedora’s
strategy while producing positive bottom-line results amid healthy
prospects for growth. AM Best expects Lion Re to continue playing an
important role in ASSA Tenedora’s strategy, as it consolidates
operations in new regions by providing reinsurance capacity while
maintaining its good capital position.
Factors that could lead to an upgrade of the ratings or positive
outlooks for Lion Re include consistently positive bottom-line results
that can contribute to further strengthening of its risk-adjusted
capitalization over the next few years. Factors that could lead to
negative rating action include a material loss of capital from either
claims or investments, leading to a reduced level of capital that does
not support its ratings.
RAM Re is registered as a segregated portfolio company, licensed as a
Class B(i) insurer under the Cayman Islands’ insurance law. RAM Re’s
ratings are based on the steady performance of its operations and the
nature of the portfolios it manages. During 2018 and 2019 there were
important developments on its portfolios that could affect its operation
as a whole. While measures have been taken to offset these developments,
such efforts have not yet materialized. AM Best expects the company to
be ready to undertake those measures. Capitalization currently is
adequate for RAM Re’s current ratings; however, revenue-generating
capabilities could become affected, and in tandem, the ability to
generate capital. If the business volume continues to grow, or as new
portfolios are integrated, Ram Re’s ratings could become pressured at
the resulting capital levels. RAM Re has explicit support from its
parent company through a commitment letter provided by Grupo ASSA,
enhancing AM Best’s view of its financial strength.
AM Best considers RAM Re’s ratings to be appropriate for the current
rating levels. Factors that could lead to negative rating action include
a more limited business profile, lower risk-adjusted capitalization and
consistent underwriting losses.
AM Best remains the leading rating agency of alternative risk transfer
entities, with more than 200 such vehicles rated throughout the world.
For current Best’s Credit Ratings and independent data on the captive
and alternative risk transfer insurance market, please visit www.ambest.com/captive.
This press release relates to Credit Ratings that have been published
on AM Best’s website. For all rating information relating to the release
and pertinent disclosures, including details of the office responsible
for issuing each of the individual ratings referenced in this release,
please see AM Best’s Recent
Rating Activity web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view Understanding
Best’s Credit Ratings. For information on the proper media
use of
Best’s Credit Ratings and AM Best press releases, please view Guide
for Media – Proper Use of Best’s Credit Ratings and AM Best Rating
Action Press Releases.
AM Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit www.ambest.com
for more information.
Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.
Contacts
Elí Sánchez
Associate Director
+52 55 1102
2720, ext. 108
[email protected]
Alfonso Novelo
Senior Director, Analytics
+52
55 1102 2720, ext. 107
[email protected]
Christopher Sharkey
Manager, Public Relations
+1
908 439 2200, ext. 5159
[email protected]
Jim Peavy
Director, Public Relations
+1 908
439 2200, ext. 5644
[email protected]
