PANAMA’S Superintendency of Insurance and Reinsurance has ordered the administrative and operational takeover of Aseguradora del Istmo.

A resolution published Tuesday, Feb.21  (subject to appeal)  lists  a series of deficiencies in the operation of the insurer leading to  the takeover.

The regulator warns that "sureties issued before

February 1, 2016 are not adequately reinsured because the reinsurer is not in a position to meet

its contractual obligations."

The reinsurance Company, was intervened by the regulator in December. The insurer maintains risks for a total of $176.9 million with Isthmus Reinsurance Company.

These hedges are being negotiated with another reinsurer at the regulator's request.

The resolution also states that "an unacceptable recurring practice has been the use of the insurer to guarantee financial obligations of the shareholders who control the company or its subsidiaries."

In addition, the company is exposed to risks for having guaranteed the execution of the construction of a public market in La Chorrera, awarded by the previous administration to the consortium HPC­Contratas­P&V.

That company is under investigation for irregularities in the Amador Convention Center project.

On Jan. 6, a process of regularization was ordered for the insurer and Luis Eduardo Varela was appointed as an advisor.

In a report, Varela said that "Aseguradora del Istmo is currently  facong a critical situation, due to exposure and to the formal absence of adequate reinsurance, and exposure to risk of guarantees and financial obligations, also without reinsurance."

At the end of 2016, Aseguradora del Istmo had written premiums of $11.8 million, representing a

market share of 0.8 percent, reports La Prensa.