A.M. Best Revises Outlook to Negative for Cooperativa Seguros Group and Its Member

A.M. Best Co. has revised the outlook to negative from stable and affirmed the financial strength rating (FSR) of A (Excellent) and issuer credit ratings (ICR) of “a” of Cooperativa Seguros Group (Cooperativa) and its operating member, Cooperativa de Seguros Multiples de Puerto Rico (CSM) (San Juan, PR). Concurrently, A.M. Best has revised the outlook to negative from stable and affirmed the FSR of A- (Excellent) and ICR of “a-” of Real Legacy Assurance Company, Inc. (Real Legacy) (Guaynabo, PR). The ratings of Cooperativa are based on the consolidation of CSM and its wholly owned separately rated subsidiary, Real Legacy.

These rating actions reflect the emergence of adverse reserve development on recent accident years, the recent downturn in underwriting performance and the group's geographic risk concentration as a property writer in Puerto Rico, the U.S. Virgin Islands (USVI) and Florida, which exposes results to frequent and potentially severe weather-related events. In addition, the Puerto Rico insurance market remains very competitive, which contributes to the group's elevated underwriting expense ratio partially due to high commission expenses. Additionally, Cooperativa’s planned growth initiatives could further impact operating performance given the current soft market conditions.

The affirmation of the ratings recognize Cooperativa’s strong capitalization, significant market presence and brand recognition within Puerto Rico and historically solid operating performance.

For Best’s Credit Ratings, an overview of the rating process and rating methodologies, please visit http://www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at http://www.ambest.com/ratings/methodology.