PRESS RELEASE

A.M. Best removes from under review and affirms ratings of Chubb Seguros Panama

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Friday, October 28, 2016

PRESS RELEAE

By A.M.Best

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October 27

MEXICO CITY - OCTOBER 27, 2016

A.M. Best has removed from under review with negative implications and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of "a" of Chubb Seguros Panama S.A.(Chubb Panama) (Panama). The outlook assigned to these Credit Ratings (ratings) is stable.

The rating actions follow A.M. Best's review of the strategic importance of Chubb Panama to its group, and the completion of The Chubb Corporation's merger into ACE INA Holdings Inc., which subsequently was renamed Chubb INA Holdings Inc. The ratings were placed under review in July 2015 following the announcement that ACE Limited was acquiring The Chubb Corporation.

The ratings reflect Chubb Panama's strong risk-adjusted capitalization, its diversified business profile, a solid reinsurance program placed with Chubb Tempest Reinsurance Ltd. and the company's affiliation to its ultimate parent, Chubb Limited, one of the world's biggest insurance groups. This affiliation provides Chubb Panama synergies and operating efficiencies. Offsetting these positive factors are Chubb Panama's modest, but growing market share within Panama's insurance industry relative to the lines it writes, and the strong competitive environment in Panama's insurance sector; however, the company partially mitigates this through a diversified business portfolio among other geographies.

Chubb Panama initiated operations in 2008 as ACE Seguros S.A., and continued with that brand name until 2016 when its name was changed to Chubb Seguros Panama S.A. The company writes mainly non-life and reinsurance business covering exposures throughout Latin America. In 2015, commercial property insurance was the company's top performing business line and currently represents 38% of gross written premiums. The company's main distribution channels are positioned with brokers. Chubb Panama has shown disciplined underwriting in a highly competitive market, consistently reporting overall premium sufficiency levels that compare positively with its competitors. Chubb Panama substantially increased its premium volume in 2015, enabling the company to enhance its underwriting profile, as demonstrated by a combined ratio of approximately 40%.

Chubb Panama's risk-based capitalization remains fully supportive of its current ratings, as measured by Best's Capital Adequacy Ratio (BCAR). The Panamanian subsidiary is mainly susceptible to underwriting risk given the current growth and retention of premium; however, the company's strong underwriting results have enhanced overall profitability metrics, reflected in a return on equity of 36% in 2015. Moreover, the company benefits from being integrated into the group, gaining operational leverage through the same systems, procedures and enterprise risk management practices. The group historically has demonstrated its support to Chubb Panama through capital injections to fund growth opportunities.

Key rating factors that could lead to positive rating actions for Chubb Panama include continued favorable trends in profitability and capital growth supported by good underwriting practices. Conversely, a sharp deterioration in operating performance or a significant weakening of its capitalization, as measured by BCAR, could lead to negative rating actions.

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.