A.M. Best Places Ratings of ASSA Compañía de Seguros S.A. Under Review With Developing Implications

A.M. Best has placed under review with developing implications the financial strength rating of A (Excellent) and the issuer credit rating of “a” of ASSA Compañía de Seguros S.A. (ASSA) (Panama City, Panama), following its announced acquisition of the Central America insurance operations wholly owned by American International Group, Inc. (AIG) (New York, NY) [NYSE:AIG].

The action follows the announcement on Oct. 15, 2015, by ASSA and AIG, that ASSA and ASSA Compañía Tenedora, S.A. have entered a share-purchase agreement to fully acquire AIG’s insurance operations in Central America, which includes El Salvador, Guatemala, Honduras and Panamá. The terms of the transaction were not disclosed. The transaction is subject to regulatory approvals in each country.

While this transaction strengthens the group’s geographic footprint in Central America, with its entrance to Guatemala and Honduras, and will further improve its market share in Panama and El Salvador, the under review status reflects the potential pressures this transaction could have in ASSA’s risk-adjusted capitalization considering the uncertainty regarding the timing and sources of the capital outflows and changes in its business profile. The under review status also acknowledges the diversification benefits and enhancement in regional presence the group will gain, but it also considers the challenges arising from the integration in terms of systems and underwriting practices. ASSA is the main insurance operating company of ASSA Compañía Tenedora, S.A. in terms of earnings contribution.

A.M. Best anticipates that ASSA’s ratings will likely remain under review through the completion of the transaction. Any material changes to the financial profile will be reviewed to assess its impact on ASSA’s ratings.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Key insurance criteria reports utilized:

• Catastrophe Analysis in A.M. Best Ratings
• Evaluating Country Risk
• Insurance Holding Company and Debt Ratings
• Rating Members of Insurance Groups
• Risk Management and the Rating Process for Insurance Companies
• Understanding Universal BCAR

View a general description of the policies and procedures used to determine credit ratings. Also in accordance with Mexican regulations, the following is a link to required disclosures – A.M. Best America Latina Supplementary Disclosure.

• Previous Rating Date: Feb. 20, 2015
• Date of Financial Data Used: June 30, 2015

This press release relates to rating(s) that have been published on A.M. Best's website. For additional 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 visit A.M. Best’s Ratings & Criteria Center.

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