AM Best has affirmed the financial strength rating of A- (Excellent) and ICRs of “a-” of Lion Reinsurance Company, but warned that the Panamanian insurance market is becoming increasingly competitive as local and large outside insurers continue to compete for market share.
The company is owned by 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, favourable capitalisation and strong business profile. ASSA maintains a well-diversified book of business that includes property, casualty and life products.
In 2013, ASSA continued its strong underwriting and operating profitability, which it received in part from favourable 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 AM Best considers to have an elevated level of country risk compared to ASSA’s ratings.
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.
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.
Lion Re’s ratings are tied to AM Best’s internal assessment of Grupo ASSA; therefore, an unfavourable operating performance or material loss of capital could result in changes to these captives’ ratings.
