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AM Best Affirms Credit Ratings of Compañía Internacional de Seguros, S.A.

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AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of a of Compa±­a Internacional de Seguros, S.A. (CIS) (Panama City, Panama). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect CIS balance sheet strength, which AM Best categorizes as strongest, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.

CIS overall strength is underpinned by its risk-adjusted capitalization being at the strongest level, historically positive technical and bottom-line results, its leading position in Panamas insurance market, a strong reinsurance program, a seasoned management team, solid risk-management practices and increased geographic diversification through Aseguradora del Istmo (ADISA) S.A. in Costa Rica. Partially offsetting these positive rating factors are the challenges CIS faces operating in a relatively limited and increasingly competitive insurance market.

CIS initiated operations in 1910 as a multiline insurer and ranks among the top companies in Panama in terms of premium market share. The companys largest business lines include health, automobile, miscellaneous, group and individual life insurance. CIS operates through a network of brokers and office branches in several cities throughout Panama.

CIS risk-adjusted capitalization, as measured by Bests Capital Adequacy Ratio (BCAR), has been maintained at the strongest level and is supportive of the ratings. Historically, the company has increased capital at an 8.0% compound annual growth rate as a result of positive bottom-line results, driven by a consistent inflow of underwriting and investment income, which reflects the management teams market knowledge and experience. AM Best expects the companys capitalization to remain stable.

In 2019, CIS operating performance was characterized by a combined ratio of 91.6% and a return on earned premiums of 20.6%. These results were supported by continued strong performance in its auto, health and group life businesses, which constitute 80% of net earned premium. The company leverages its health segment performance through Blue Cross Blue Shield, a health care provider network in the United States. In addition, CIS fire business has improved due to a strategic focus on specific niches, in conjunction with lower reinsurance costs, despite strong competition in this business line that historically has generated losses. Financial income continues to support CIS results while it maintains a sound risk profile; however, the company is not dependent on this revenue to achieve positive bottom-line results. Although the companys overall performance is strong, it constantly reviews its underwriting guidelines to improve the performance of business segments that are deviating from targets.

Despite the many positive characteristics of CIS, the ratings are limited by the competitive environment present in its domestic market, as well as AM Bests perception of the country risk in Panama, which has an AM Best country risk tier ranking of CRT-4, the second highest level in this scale.

Positive factors that might improve the rating level or outlook include improvements in Panamas risk profile while maintaining a stable trend in CIS profitability and supportive risk-adjusted capitalization. Factors that might lead to negative rating actions include protracted adverse underwriting and overall performance, a change in the Blue Cross Blue Shield alliance, a significant deterioration in its risk-adjusted capitalization or a downgrade of Panamas country risk tier rating.

This press release relates to Credit Ratings that have been published on AM Bests 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 Bests Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Bests Credit Ratings. For information on the proper media use of Bests Credit Ratings and AM Best press releases, please view Guide for Media – Proper Use of Bests Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright 2020 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Salvador Smith

Financial Analyst

+52 55 1102 2720, ext. 108

salvador.smith@ambest.com

Alfonso Novelo

Senior Director, Analytics

+52 55 1102 2720, ext. 107

alfonso.novelo@ambest.com

Christopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.com

Jim Peavy

Director, Public Relations

+1 908 439 2200, ext. 5644

james.peavy@ambest.com

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