A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) and issuer credit rating of “a-” of Istmo Compañia de Reaseguros and its subsidiaries, Del Istmo Assurance and Liffey Reinsurance Company Limited.
All companies are domiciled in Panama City, Panama.
The ratings of Istmo Re reflect its strong risk-adjusted capitalisation, stable underwriting performance and established competitive position in the domestic insurance market.
In 2013, Istmo Re continued its strong underwriting and operating profitability, which it received in part from favorable overall earnings.
Partially offsetting these positive attributes are potential changes in the regulatory environment that could negatively impact the company’s ability to write business, its rapid expansion and the risks associated with writing catastrophe business.
However, Istmo Re has not experienced any major catastrophe events since 2007 and has limited exposure to oceanfront property business.
Istmo Re has established an enterprise risk management framework to identify measure and monitor both existing and emerging risks across its respective business entities and to allocate capital accordingly.
The company’s strategy is to focus on the needs of the small to mid-sized market players and to provide customised products, technical expertise and superior customer service to its clients. This strategy has proven successful for Istmo Re and is evidenced by its strong working relationships and high client retention levels.
Positive rating actions could occur if Istmo Re maintains its consistently strong underwriting performance and long-term profitability in conjunction with an upgrading of Panama’s country risk tier. Negative rating actions could occur if there were a significant decline in the company’s risk-based capitalisation, sustained adverse operating performance or a downgrading of Panama’s country risk tier.
The affirmation of Del Istmo Assurance’s ratings reflects its supportive risk-adjusted capitalisation, favorable operating performance and experienced management team that is very familiar with its written business. Offsetting these positive rating factors is Del Istmo Assurance’s limited business profile as it writes primarily performance bonds in Panama.
The ratings of Liffey Re recognise its adequate risk-adjusted capitalisation, stable operating profitability aided by its retrocession coverage and the support it receives from Istmo Re. Liffey Re is a single-parent captive of a Dublin general business reinsurer.
Liffey Re reported favorable operating performance over the past five years. The company’s performance has been aided by its strong retrocessional coverage with a diversified panel of global reinsurers. Offsetting these positive rating factors is the company’s limited business profile as it currently only assumes business from its parent.
Positive rating actions may be considered in the long term if Liffey Re maintains strong operating results and capitalisation levels.
Negative rating actions may occur if the company grows excessively or if operating results or capitalisation deteriorates significantly.
