MEXICO CITY--(BUSINESS WIRE)--AM Best has revised the outlook to positive from stable for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term ICR of “a” (Excellent) of ASSA Compañía de Seguros S.A. (ASSA) (Panama City, Panama). The outlook of the FSR is stable. ASSA is a subsidiary of ASSA Compañía Tenedora, S.A. and is owned ultimately by Grupo ASSA, S.A., a financial service holding company publicly traded on the Panama Stock Exchange.
The Credit Ratings (ratings) of ASSA reflect its balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management.
The positive outlook on the Long-Term ICR is based on ASSA’s consistent operating performance, which AM Best expects to be sustained over the long term while growing its top line amid market developments and economic recovery.
The ratings also reflect ASSA’s balance sheet strength, which is underpinned by its risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), sustained good underwriting quality and profitability, solid capital management, an adequate reinsurance program and a supporting risk management framework for its risk profile. Additionally, the company has been able to maintain adequate financial leverage by repaying ahead of schedule most of the financing used in the 2018 transaction when ASSA acquired 100% of Assicurazioni Generali S.p.A.’s Panama branch.
ASSA is a Panama-based insurer established in 1980 and ranks as the largest insurance company in Panama in terms of market share, based on premium and profit. The company, which has a subsidiary in El Salvador, is diversified geographically and has a diversified portfolio of products, with net premiums written mainly composed of auto, individual and group life and health insurance. ASSA operates through a network of brokers, agents and direct distribution channels.
The company´s capital base has consistently grown through reinvestment of earnings despite intangibles of Generali’s acquired business that continue to be amortized. A well-diversified reinsurance program placed among a high quality panel of reinsurers has reinforced the company’s growth strategy, and consequently, counterparty credit risk exposures have been minimized.
In 2021, ASSA’s favorable operating performance continued, characterized by a combined ratio below 100%. Profitable underwriting results were sustained through a well-contained expense structure partially driven by the constitution of IBNR reserves, to cover unreported claims for individual and group life; as well as health claims consisting of elective surgeries suspended in 2020 that developed in 2021. ASSA maintains a sound risk profile, and financial income continues to support its results; however, the company is not dependent on this revenue to achieve positive bottom-line results. ASSA constantly reviews its underwriting guidelines to improve the performance of business segments that are deviating from targets.
Positive rating actions could take place if ASSA is able to sustain improvements in its operating performance. Negative rating actions could occur if the company’s available capital is not able to support its risks, either from capital outflows or from a greater risk appetite. Additionally, negative rating actions could derive from a higher financial leverage or lower interest coverage metrics at the holding company.
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