AM Best Upgrades Credit Ratings of Chubb Seguros Panama S.A.

BY Business Wire | CORPORATE | 11/18/22 12:34 PM EST

MEXICO CITY--(BUSINESS WIRE)-- AM Best has upgraded the Financial Strength Rating to A++ (Superior) from A+ (Superior) and the Long-Term Issuer Credit Rating to ?aa+? (Superior) from ?aa-? (Superior) of Chubb Seguros Panama S.A. (Chubb Panama) (Panama City, Panama). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Chubb Panama?s strategic importance as a subsidiary of the Chubb U.S. Group of Insurance Companies (Chubb U.S Group), which on a consolidated basis has a balance sheet strength that AM Best assesses at the strongest level, as well as its very strong operating performance, favorable business profile and appropriate enterprise risk management (ERM).

The upgrade of Chubb Panama?s ratings reflects the company?s integration and support from its group through its holding company, Chubb U.S Group, which provides synergies and operating efficiencies to the Panama subsidiary.

The stable outlooks reflect AM Best's expectation that Chubb U.S Group will maintain its strongest balance sheet strength assessment, supported by risk-adjusted capitalization at the strongest level, as measured by Best?s Capital Adequacy Ratio (BCAR), while continuing to demonstrate very strong operating results driven by the group's consistently solid underwriting performance. The stable outlooks further reflect AM Best's expectation that the ultimate parent, Chubb Limited, will continue to have a neutral impact on the ratings of the group?s members.

The ratings reflect Chubb Panama?s sound underwriting practices, which support its consistent operating performance, diversified business portfolio and solid reinsurance program placed with Chubb Tempest Reinsurance Ltd., as well as the company?s affiliation to its ultimate parent, Chubb Limited, one of the world?s largest insurance groups. This affiliation provides Chubb Panama with synergies and operating efficiencies. Offsetting these positive rating factors are Chubb Panama?s modest but growing market share within Panama?s insurance industry relative to the lines of business it writes, and the strong competitive environment in Panama?s insurance sector. However, the company partially mitigates this competitive aspect through its diversified business portfolio that is spread across other markets in Central America.

Chubb Panama initiated operations in 2008 as ACE Seguros S.A., and continued with that brand name until 2016 when its name was changed to Chubb Seguros Panama S.A. The company writes mainly non-life and reinsurance business, covering exposures throughout Panama and Central America. In 2021, property stood as the company?s main business line, generating 28.8% of its net written premium. Chubb Panama?s main distribution channels are positioned with brokers and cedent companies. Chubb Panama has shown disciplined underwriting in a highly competitive market, consistently reporting overall premium sufficiency levels that compare positively with its competitors. In 2021, Chubb Panama achieved a combined ratio of approximately 92%, up from 78.7% in 2020, and driven by the increase in claims in its fire and transport business lines, as well as an increase in its administrative expenses.

The Panama subsidiary?s strong underwriting results have sustained sound overall profitability, as reflected in a return-on-equity ratio of 5.0%, and contributed to expanding the company?s capital base at a 10.2% compound annual growth rate in 2021. AM Best expects Chubb Panama?s risk-based capitalization to remain supported by the group?s conservative capital management guidelines.

Moreover, the company benefits from being integrated into the group, gaining operational leverage through the same systems, procedures and ERM practices. The group historically has demonstrated its support to Chubb Panama through capital injections to fund growth opportunities. A change in AM Best?s perception regarding the strategic importance of Chubb Panama to the group could impact Chubb Panama?s ratings.

The ratings could be negatively affected by the following factors: deterioration in the group's risk-adjusted capitalization to a level that no longer supports the current ratings; sustained deterioration in underwriting or operating performance; a material weakening of Chubb Ltd.'s overall credit profile.

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 Guide to Best?s Credit Ratings. For information on the proper use of Best?s Credit Ratings, Best?s Performance Assessments, Best?s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best?s Ratings & Assessments.

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 London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright ? 2022 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Source: AM Best

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

fir_news_article