A.M. Best Co. has affirmed the financial strength rating (FSR) of
A (Excellent) and issuer credit rating (ICR) of "a" of ASSA Compania
de Seguros, S.A. (ASSA) (Panama City, Panama).
A.M. Best also has affirmed the FSR of A- (Excellent) and ICRs of "a-"
of Lion Reinsurance Company Limited (Lion Re) (Bermuda) and Reaseguradora
America SPC Ltd (RAM Re) (Cayman Islands). All
companies are ultimately owned by Grupo ASSA, S.A. (Grupo ASSA),
a financial services holding company publicly traded on the Panama stock
exchange. The outlook for all ratings is stable.
The ratings reflect ASSA's continued excellent operating results,
favorable capitalization and strong business profile. ASSA maintains a
well-diversified book of business that includes both property/casualty
and life/health products.
In 2013, ASSA continued its strong underwriting and operating
profitability, which it received in part from favorable overall
earnings. The company has a proven track record of solid operating
earnings, a superior capital position and extensive local market
knowledge. Additionally, the improved operating environment in recent
years has outweighed the company's concentration and regulatory
concerns. ASSA also benefits from established risk management systems
and strong reinsurance programs across most lines of business.
Partially offsetting these positive rating factors is ASSA's risk
concentration in a geographically limited insurance market, along with
operating in a country that A.M. Best considers to have an elevated
level of country risk compared to ASSA's ratings. Furthermore, the
Panamanian insurance market is becoming increasingly competitive as
local and large outside insurers continue to compete for market share.
Positive rating actions could occur if ASSA maintains its consistently
strong underwriting performance and long-term profitability in
conjunction with an upgrading of Panama's country risk tier. Negative
rating triggers could occur if there were a significant decline in
ASSA's risk-based capitalization, sustained adverse operating
performace or a downgrading of Panama's country risk tier.
The ratings of Lion Re acknowledge its good capital position,
conservative operating strategy and explicit parental support. The
ratings also consider Lion Re's strategic role as a captive reinsurer of
ASSA Tenedora, S.A.
Also inuring to Lion Re's ratings is its sound business plan, good
underwriting performance and liquidity measures during its first three
years of operation. Lion Re operates as a Bermuda-based reinsurer
focused on writing a combination of property/casualty and health and
group life business from affiliated insurers.
The ratings of RAM Re reflect its adequate capitalization, explicit
parental support and strategic role as an alternative risk transfer
RAM Re's ratings also reflect a sound business plan, upon which the
profitability and liquidity measures of the ratings are based. The
ratings are supported by an amount of capital that meets A.M. Best's
requirements for newly formed companies as measured by Best's Capital
Adequacy Ratio (BCAR). RAM Re was incorporated on January 2013 and
licensed by the Cayman Island Monetary Authority (CIMA) as a Class B
Insurer under Section 4 of the Law. RAM Re will write reinsurance
business mainly with ASSA Compania Tenedora, S.A.'s operating
subsidiaries in Panama, Costa Rica, Nicaragua and El Salvador.
RAM Re will underwrite bancassurance, property/casualty (excluding or
managing catastrophe cover under limited conditions), credit and debit
card fraud, unemployment benefits and short-term group life related
These positive rating factors are partially offset by RAM Re's execution
risk due to its unproven start-up nature.
Drivers that could lead to an upgrading of the ratings and/or a positive
outlook for Lion Re and Ram Re are stable underwriting performances, as
well as reduced overall net exposure over the next few years and
successful implementation of their business plans. Factors that could
lead to a downgrading of the ratings and/or a negative outlook are a
material loss of capital from either claims or investments, a reduced
level of capital that does not support their ratings or an increase in
ASSA, Lion Re and Ram Re's ratings are tied to A.M. Best's internal
assessment of Grupo ASSA; therefore, an unfavorable operating
performance or material loss of capital could result in changes to these
A.M. Best remains the leading rating agency of alternative risk transfer
entities, with more than 200 such vehicles rated in the United States
and 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.
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. Best's Credit Rating Methodology can be
found at www.ambest.com/ratings/methodology
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 © 2014 by A.M. Best Company, Inc. ALL RIGHTS
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