Probitas Syndicate backer Istmo Re downgraded after regulatory intervention

Istmo Compañía de Reaseguros (Istmo Re), the Panama reinsurer which backs Probitas Syndicate 1492 at Lloyd’s, has been downgraded to ‘E’ from ‘B’ by AM Best following the intervention of its regulator in Panama.

The company’s financial strength rating has been downgraded to ‘E’ from ‘B’ by AM Best.

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.

SSRP’s notice of intervention and findings came after its review of the company’s unaudited third quarter financial statements, and an on-site regulatory inspection at Istmo Re’s offices.

Istmo Re had provided the regulators with an action plan dated September 5, 2016, under which it would sell its assets and reduce its outstanding debt over a three-month period. However, as of December 1, 2016, no actions had been implemented and the regulator intervened.

AM Best said it will closely monitor the ratings of Istmo Re and its subsidiaries, which include Liffey Reinsurance Company Designation Activity Company (Liffey Re), based in Ireland, and Aseguradora del Istmo, based in Panama.

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.