A.M. Best Affirms Rating of ASSA Compania de Seguros S.A

A.M. Best Affirms Rating of ASSA Compania de Seguros S.A

Business Editors

OLDWICK, N.J.–(BUSINESS WIRE)–July 3, 2001

A.M. Best Co. has affirmed the A- (Excellent) financial strength rating of ASSA Compania de Seguros S.A., Panama City.

The rating is attributable to ASSA’s financial strength, prominent

position in the Panamanian market, consistently favorable operating

trends and sustained profitable growth. The company has a solid

balance sheet, excellent capitalization and demonstrated success in enhancing its competitive market position.

ASSA is one of the largest insurance companies in Panama, based on

gross premiums written of $66.2 million it has approximately an 18%

market share and is one of the largest in Central America, with

strategic investments in Nicaragua and Costa Rica. ASSA has achieved targeted capital growth with exceptional solvency, driven by the performance of its high quality investment strategy. The company maintains superior capitalization through controlled growth and solid financial management. The economic value of the company is measured by set returns on allocated capital. ASSA’s operating guidelines, sensible reserving practices, prudent underwriting and superior investment portfolio, have enabled it to outperform most regional

peers.

ASSA is very profitable and has reported strong earnings over the

past five years, averaging pretax returns on revenue of 28.2% and a

total return on equity of 25.2%. These strong returns are due to

favorable underwriting results and investment income. In 2000, the

company merged with competitors: Real Panamena de Seguros, S.A. and WICO increasing revenues by almost 7% in the local market.

A.M. Best believes ASSA’s business plan projects reasonable new

business volume and sufficient capital to support operations over the

short- to medium-term. ASSA will continue the re-design of its

internal business processes to further enhance operating efficiencies and sustain performance trends. Given management’s experience with similar initiatives, A.M. Best expects a successful implementation of this program and further operational improvements. Accordingly, A.M. Best has assigned a stable-rating outlook to ASSA.

Offsetting these positive-rating factors is the uncertainty of the

local market’s volatility. Also, the local market has turned highly

competitive with the increased consolidation of local insurers,

offering new challenges for ASSA to increase and sustain market share.

A.M. Best Co., established in 1899, is the world’s oldest and most

authoritative insurance rating and information source. For more

information, visit A.M. Best’s Web site at www.ambest.com.

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