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A.M. Best Downgrades Credit Ratings of Istmo Compañía de Reaseguros, Inc.; Removes from Under Review with Negative Implications

A.M.Best has removed from under review with negative implications and downgradedthe Financial Strength Rating to a Non-Rating Designation of E (UnderRegulatory Supervision) from B (Fair) and the Long-Term Issuer Credit Rating to"e" from "bb+" of Istmo Cia. de Reaseguros Inc. (Istmo Re) (Panama City,Panama).

Therating actions taken on Istmo Re reflect a regulatory intervention at thecompany on Dec. 12, 2016 by the Superintendent of Insurance and Reinsurance ofPanama (SSRP). These actions were publicized through a press release issued bythe SSRP, in which the regulator stated that Istmo Re failed to cover theminimum regulatory requirements for paid capital, presented an inferior ratioof net premium to net surplus to that required by regulation, relied oninsufficient assets to integrally satisfy its liabilities and is incapable ofcontinuing operations without compromising the interests of policyholders.

SSRP'snotice of intervention and findings came after its review of the company'sunaudited third quarter financial statements, and an on-site regulatoryinspection at Istmo Re's offices. Furthermore, Istmo Re had provided theregulators with an action plan dated Sept. 5, 2016, under which it would sell itsassets and reduce its outstanding debt over a three-month period. However, asof Dec. 1, 2016, no actions had been implemented and therefore throughmemorandum DSES-M-352, the Director of Supervision of Insurance and ReinsuranceCompanies recommended the intervention at Istmo Re. This regulatory action isexpected to last no less than 180 days.