INSURANCE IN PANAMA

GENERAL FEATURES

1. BACKGROUND

1.1. HISTORY OF INSURANCE

To understand the science of insurance and reinsurance, it is essential to properly understand their origin and
evolution .

This legislation on the mutual aid of marine merchants established that: if a ship is caught in a storm and is
forced to throw its cargo or part of it into the sea, as long as its mainmast, its mast, its tiller, its anchor and
rudder; The owners of the transported merchandise would contribute with the value of the ship and the
merchandise that had been lost at sea due to storms.

The practice of preventing a large loss for a single individual by accepting a small loss for all members of a
group , i.e., risk sharing is the essence of the insurance principle.

The Maritime Law of Rhodes was incorporated into the Justinian Code of the Romans, since its use on many
occasions was of great help to those maritime merchants who suffered throughout their voyages .

In the days of Roman predominance, the principle of insurance was tested in various forms. These
associations contributed to the funeral expenses of their members.

There were also brotherhoods of merchants and artisans.

Most of the insurance activities carried out during the Middle Ages in some European countries were
conducted in England as a product of their commercial activity, who introduced the idea of the principle of risk
distribution . The Italian influence was of great importance in the field of Insurance. So we have, the word
"Policy", in Italian (Polizza); had its origin in this country, which means promise.

The first recognized center of Insurance business began on Lombard Street in London.

It is considered of great importance to have a knowledge of the commercial transformations of Lloyd's of

London in the science of Insurance and Reinsurance. London, on Toser Street. He had an establishment or
cafe where purchases and sales of boats were made: freight, purchases of rigging and supplies, equipment
contracts and everything related to the corresponding Insurance. At this time it was individual merchants who
carried out the Insurance business, there were no Insurance Companies.

The London coffee house gained greater prestige to the point that a group of individual insurers attending the
coffee house formed an independent Association principle published in the New Lloyd's Coffee House.

In 1785 the establishment called Edward Lloyd's on Lombard Street disappeared and the insurance elements
that still predominated in it began to constitute the aforementioned Association and the word "new" was
deleted, leaving the name again in "Lloyd's List", a title that was preserved until the present.

The history of Reinsurance is very short and recent. Towards the end of the 14th century, when an shipment
was made from an Italian port and because the trip was considered very risky, the shipment destined for those
ports had to be reinsured.

The formation of Reinsurance arises due to the need of an insurer or Insurance Company to want to distribute
the risk that it had to assume.

The oldest Reinsurance Contract is the one granted in Genoa on July 12, 1370 for maritime insurance.

The first Reinsurance Treaty appears in 1871 agreed by the Company Royal d'Assurances against Incendie
and the Ciedes Propietaires Reunis of Brussels.

In 1746 it was said that Reinsurance was more of a game .

The development of Reinsurance is so recent that the United States, a power today, did not have a
Reinsurance Company (19th century).
The most important markets that currently exist are: Switzerland, England, the United States , France ,
Scandinavia.

1.2 HISTORY OF PANAMA INSURANCE COMPANIES

ACQUISITIONS AND MERGERS

1. Compañía Internacional de Seguros, SA absorbed Compañía Internacional de Seguros de Vida, SA by

merger and acquired the portfolio of Cía. Afianzadora y Aseguradora de Panamá , SA on December 1, 2000.

2. CONASE acquires Compañía de Seguros Chagres, SA by merger on November 22, 2000, which had
absorbed Signa Compañía de Seguros de Panamá , SA on July 29, 1998.

3. Aseguradora Mundial absorbed the portfolio of Occidental Life Ins. On 09/04/1997 and by merger
Aseguradora La Unión on 05/08/2000 and Aseguradora Atlántico, SA on 05/20/2003.

4. Assa absorbed Cía by merger. General de Seguros, SA, Cía. Interamericana de Seguros, Panameña de
Seguros and Metropolitana de Seguros de Vida. Also to Real Panameña de Seguros on 06/15/2000 and to
Wico Cía. of Insurance on 12/13/2000.

5. Capital de Seguros absorbed the portfolio of Atlantic Southern Ins. Co of PR on 01/08/200.

6. Interoceánica de Seguros acquired the general and surety portfolio of Pan American of Panama on
05/08/2001.

7. Empresa General de Seguros, SA previously called Commercial Insurance Company (ASECOMER). Res
0072 of 02/10/2005.

8. Afianzadora Global, SA formerly called Afianzadora Colón, SA Res0188 of 05/03/2005.

2.1.3. SUPERINTENDENCE OF INSURANCE AND REINSURANCE,

A LOOK AT ITS HISTORY

Insurance activity has been present in Panama since the beginning of this century. The insurance industry in
Panama dates back to the beginning of the 20th century. North American Insurance companies established
operations on this Isthmus since that time and in 1910, the first insurance company with Panamanian capital
was founded, giving rise to a vigorous industry. The promoters of this activity fought to safeguard their image
and for the creation of an insurance law that could properly regulate and supervise this market .

For approximately half a century, insurance activity was framed within the parameters of the Commercial
Code . It was not until August 22, 1956, that Panama had the first law that specifically regulated the insurance
and capitalization business. This was the date when the Permanent Legislative Commission approved Decree-
Law No.17 of 1956. With the regulation of this Decree-Law, the regulation of the insurance business was
achieved and it regulated the profession of Insurance Broker; Thus issuing the first licenses for both Insurance
Companies in 1956 and Insurance Broker licenses in 1957.

The insurance activity is thus subject to the supervision of the Executive Body through an Insurance
Superintendency that would function in the Ministry of Agriculture , Commerce and Industries . On June 3,
1969, through Cabinet Decree No.145, the Provisional Government Board created the Ministry of Commerce
and Industry and the Ministry of Agriculture and Livestock, thus dividing the old Ministry of Agriculture,
Commerce and Industries. Decree 17 was repealed in 1984 by Law 55 of December 20, which in its Article 9
creates the Superintendency of Insurance and Reinsurance of Panama (SEP) as an entity attached to the
Ministry of Commerce and Industry. This law regulates the insurance and capitalization business and the
exercise of the profession of insurance broker.

Law No.56 of that same date, creates the National Reinsurance Commission, also attached to the Ministry of
Commerce and Industries and regulates the operations of reinsurance companies and dictates standards that
regulate all reinsurance operations in the Republic; In it, the SEP is assigned as the executing arm of the
National Reinsurance Commission. Law 55 of December 20, 1984 was repealed by Law 59 of June 29, 1996.
This law currently in force opened a new chapter in insurance history , since it carries out adequate supervision
and surveillance of the insurance sector.

Given the international nature of the insurance industry, especially in these times of open economies and
brand fusion at a regional level, the SSRP has given great importance to developing its image within
international organizations related to insurance . Thus, since 1990, the Superintendency has been concerned
with participating and representing Panama in events of interest to the insurance world.

The Superintendence of Insurance and Reinsurance is a founding partner of

 International Association of Insurance Supervisors, founded in Chicago in June 1993.

 International Association of Insurance Regulators, founded in Guernsey, in February 1993.

 Association of Insurance Superintendents of Latin America (ASSAL).

 International Association of Insurance Fraud Agencies.

The responsibilities that the Superintendency of Panama has assumed before these organizations have
achieved today in the name of "Panama" respect at the level of the insurance regulatory entities of the world.

2.1.2. GENERAL OBJECTIVES

 Present historical background on the insurance companies established in the Republic of Panama.

 Show a detailed report on mergers , interventions and acquisitions of other insurers' portfolios.

 Compare and analyze the solvency, liquidity and equity indices of the last three periods ending in 2004,
2005 and 2006 corresponding to the insurance companies of the Republic of Panama.

 Compare levels of premiums written, claims and policies acquired in the periods 2004, 2005 and 2006 in all
lines offered by insurance companies.

 Show the position of insurance companies in the Republic of Panama in the market regarding premiums,
claims, lines, equity, solvency and liquidity.

 Show a brief focus on regulations established in the Republic of Panama for insurance companies that
contemplate the aforementioned indices.

 Analyze perspectives on the Panamanian and Central American insurance industry of the 21st century.

 Compare other sectors with the performance of the insurance sector.

3.5 Insurance companies, new licenses and specialties.

INSURANCE COMPANIES AUTHORIZED IN PANAMA

RAMOS

NAME FOREIGN CREATED LIFE GRAL. BAIL RESEARCH

CIA INTERNACIONAL DE
1957 x x x x
SEGUROS, SA

CIA NACIONAL DE SEGUROS, SA 1957 x x x x

NATIONAL UNION FIRE INS. CO.

x 1957 x x x
Of PITTS PA.
PAN AMERICAN DE PANAMA,
x 1957 x
SA

CIA ISTMEÑA DE SEGUROS, SA 1957 x x x

AMERICAN LIFE INS. CO. x 1962 x

BRITISH AMERICAN INS.CO. x 1966 x

WORLD INSURANCE, SA 1967 x x x x

ASSICURAZIONI GENERALI, SA x 1970 x x x x

CIA INTEROCEANICA DE
1972 x x x x
SEGUROS, SA

PANAMERICAN LIFE IN. CO. 1978 x

ASSA INSURANCE COMPANY,

1981 x x x x
SA

GENERAL INSURANCE
1983 x x x x
COMPANY, SA

ANCON INSURANCE, SA 1992 x x x x

FEDPA INSURANCE, SA 1994 x x x

AMERICAN ASSURANCE, CORP. 1994 x x x

CAPITAL DE SEGUROS, SA 1998 x x x

AFIANCEADORA GLOBAL, SA 2003 x

MEDISALUD, SA 2006 x

WORLDWIDE MEDICAL
2006 x x
INSSURANCE

Eight (8) insurance companies operate in Panama that specialize in the four main branches of service , that is,
life, general, surety and reinsurance. While others such as Pan American of Panama, American Life and
Medisalud operate only for the life branch, on the other hand, there are 4 that are distinguished by not offering
reinsurance and one that only specializes in surety (Afianzadora Global). We can also add that of the total
number of existing companies, five (5) are foreign.

Market

20 insurance companies operate in Panama; 14 Reinsurers; 3 Reinsurance Brokerage Companies; 3 Captive

Insurers; 4 Administrators of Captive Insurance Companies; 19 Insurance Adjuster companies; 4 Insurance
Adjusters (natural person ), 275 insurance brokerage companies and 1,792 insurance brokers (natural
person), 219 Provisional Awards for Insurance Brokers (Life Branch) and 1 insurance broker portfolio manager.

NEW POLICIES AUTHORIZED BY COMPANY AS OF JULY 2006

No. INSURANCE COMPANIES TOTAL

1 American Life Ins. Co. 2

2 Ancon Insurance Company 3

3 World Insurance, S. TO. 1

4 Assa Cía. Insurance, S. TO. 5

5 Assicurazioni Generali, SpA 1

6 British American Ins. Co. Limited. 1

7 Capital de Seguros, S. TO.. 1

8 Inc. Insurance International, S. TO. 11

9 Inc. Interoceánica de Seguros, S. TO.. 2

10 Inc. National Insurance, S. TO. 7

11 General Insurance Companies, S. TO. 1

12 National Union Fire Ins. Co. of Pitts. Da 1

Total authorized policies 36