Probitas may seek buyer for capacity provided by Istmo Re

The chief executive of Probitas Syndicate 1492 at Lloyd’s has said the syndicate may move to find a buyer for the capacity and shareholding in Probitas provided by Istmo Compañía de Reaseguros (Istmo Re), the Panama reinsurer now under  regulatory supervision in its home market.

Istmo Re has been downgraded to ‘E’ from ‘B’ by AM Best following the intervention of the regulator in Panama.

The rating ‘E’ means a company is under regulatory supervision and reflects a regulatory intervention at the company on December 12, 2016 by the Superintendent of Insurance and Reinsurance of Panama (SSRP).

The action was taken for several reasons including Istmo Re failing to cover the minimum regulatory requirements for paid capital, presenting an inferior ratio of net premium to net surplus to that required by regulation and relying on insufficient assets to integrally satisfy its liabilities.

Ash Bathia, chief executive of Probitas Syndicate 1492, said that he is aware that the Panama Regulator has taken control of the management of Istmo Re but stressed that, whilst Istmo is a founder investor in Probitas, the impact of the downgrade and intervention will not be meaningful for Probitas.

He stressed that management has the sole responsibility for the running of the Probitas Syndicate 1492 and that Istmo's participation in the 2017 underwriting capacity of the syndicate is less than 2 percent.

“Furthermore, in the event that a situation like this arises, in accordance with an agreement with Istmo, management has the right to find an acceptable buyer of their capacity and shareholding in Probitas,” Bathia he said.

“We are working closely with Lloyd’s and they are fully supportive of our actions.

The strong trading position, ambition and aspirations of the syndicate to build a market-leading business, focussed on high growth and emerging markets, remains unchanged.”