A.M. Best Affirms Ratings of Reaseguradora Patria, S.A.; Assigns Mexico National Scale Rating
The ratings reflect Patria Re’s excellent risk-adjusted capitalization and low underwriting leverage, comprehensive enterprise risk management infrastructure, expansive knowledge of its core Latin American markets, as well as the company’s strong liquidity metrics. Patria Re has established a solid niche position in
Offsetting these strengths are Patria Re’s increasing expense structure, the relatively important participation of equities in its investment portfolio and the company’s exposure to severe catastrophic losses. In addition, Patria Re’s risk profile continues to slowly shift as a result of its assumption of exposures outside of its core markets. While this affords Patria Re planned geographic diversification, it is expanding into highly competitive and mature markets. Furthermore, the reinsurance sector as a whole faces significant pricing pressure with third party capital taking a larger share of property catastrophe business and primary companies retaining more business.
At year-end 2014, the company registered a return on equity (ROE) and return on assets (ROA) of (-0.9%) and (-0.5%) respectively, mainly driven by the increase in claims, prudent reserving policies and unrealized losses in its investment portfolio. The negative bottom line results were close to the breakeven point without significantly deteriorating the company’s capitalization. Furthermore, Patria Re continuously reviews its underwriting practices and improvements in practices and improvements in results are already reflected as of
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Key insurance criteria reports utilized:
- A.M. Best’s Ratings on a National Scale
- Catastrophe Analysis in A.M. Best Ratings
- Evaluating Country Risk
-
Insurance Holding Company and Debt Ratings - Risk Management and the Rating Process for Insurance Companies
- Understanding Universal BCAR
View a general description of the policies and procedures used to determine credit ratings. Also in accordance with Mexican regulations, the following is a link to required disclosures – A.M. Best America Latina Supplementary Disclosure.
- Previous Rating Date:
Oct. 24, 2014 - Date of Financial Data Used:
June 30, 2015
This press release relates to rating(s) that have been published on
A.M. Best’s credit ratings are independent and objective opinions, not statements of fact.
Copyright © 2015 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.
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