A.M. Best Upgrades Ratings of Mapfre Panamá S.A.

A.M. Best has upgraded the financial strength rating to A (Excellent) from A- (Excellent) and the issuer credit rating to “a” from “a-” of Mapfre Panamá S.A. (Mapfre Panamá ) (Panama City, Panama). The outlook for both ratings is stable.

The upgrade of the ratings of Mapfre Panamá reflects its geographic importance to MAPFRE S.A. (Mapfre Group) in the Central American market, as well as the incorporation of the Mapfre Group’s practices and procedures into Mapfre Panamá. In addition, Mapfre Panamá has been able to consistently produce good underwriting results and maintain a favorable capital position. Offsetting the positive rating factors are the recent increase in claims during 2013 and the increasingly competitive environment for its core businesses.

Mapfre Panamá continues to be the third-largest insurer in Panama, and has achieved consistent results due to it being the market leader in the country’s individual life and auto segments. Year-end 2013 results were affected by higher claims that are not expected to increase as underwriting practices have been adjusted. Additionally, Mapfre Panamá’s solid capital base and good reserve position made possible a reserve release that helped improve net income. Enterprise risk management practices and procedures from Mapfre Group are implemented and will continue to positively affect the future performance of the company.

The strong competitive environment in Panama’s insurance market, especially in segments where Mapfre Panamá has leading positions, continues to generate soft market conditions or increased risk appetite across the industry, undermining improvements in the operating performance of the company.

A.M. Best considers Mapfre Panamá to be well-positioned for its current rating level. Positive rating actions could occur if the company is able to maintain profitability, despite challenging market conditions, while improving its capital base.

Negative rating actions could derive from important reductions in its capital that prove to be non-supportive of current ratings, or if the company deviates significantly from the practices and benefits assumed from its association with Mapfre Group.

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
• Risk Management and the Rating Process for Insurance Companies
• Rating Members of Insurance Groups
• Understanding Universal BCAR

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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