A.M. Best has affirmed the financial strength rating of B+ (Good) and the issuer credit rating (ICR) of “bbb-” of Worldwide Medical Assurance, Ltd. Corp. (WWMA) (Panama City, Panama). The outlook for both ratings remains stable.

The affirmation of the ratings reflects the company’s strong risk-adjusted capitalization and adequate profitability indicators. These strengths are offset by the company’s volatile operating performance, dependence on its reinsurance counterparties in order to implement its growth targets and the highly competitive landscape in Latin America’s health and life insurance segments.

The company was created in 1999 and has successfully grown in its niche market, providing insurance for clients traveling overseas to receive medical attention; this is done through a mix of brokers and agents, bancassurance and direct distribution channels. WWMA benefits from its partial ownership by KFW DEG (a German government entity), its model to optimize the selection of medical care providers and the support from highly rated reinsurance counterparties.

Historically, the company has maintained positive capital creation capacity, which in line with a conservative earnings reinvestment strategy, has contributed to its solid risk-adjusted capital adequacy, as measured by Best’s Capital Adequacy Ratio (BCAR). Capital management is further strengthened by the use and development of WWMA’s own economic capital model and enterprise risk management practices.

WWMA’s expansion into the life segment during 2014 resulted in additional expenses that impacted underwriting results and ultimately pressured profitability indicators. Performance indicators such as return on equity and return on assets were 9.4% and 3.3%, respectively. In contrast, the company managed to improve operational performance during 2015. However, the company still maintains volatility in profitability metrics as a result of growth and changes in its risk retention strategy. Although WWMA has been able to diversify and improve its reinsurance program and strengthen its capital through their partnership with KFW DEG, the long-term consistency of this strategy still needs to be consolidated.

Factors that could lead to positive rating actions include achieving a more stable operating performance, a successful consolidation of company operations in targeted locations and maintaining diversification across highly rated reinsurers. Negative rating actions are not expected in the short term unless significant changes in the strategy damage the company’s income-generating profile or if there is either a material deterioration of current capital adequacy ratios, as measured by BCAR.

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:

  • Evaluating Non-Insurance Ultimate Parents
  • Evaluating Country Risk
  • Insurance Holding Company and Debt Ratings
  • 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: October 29, 2014
  • Date of Financial Data Used: November 30, 2015

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