A.M. Best Revises Outlook to Positive and Affirms Ratings of Cooperativa de Seguros de Vida de Puerto Rico

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has revised the outlook to positive from stable and affirmed the financial strength rating of B- (Fair) and issuer credit rating of “bb-” of Cooperativa de Seguros de Vida de Puerto Rico(COSVI) (San Juan, PR). COSVI is a cooperative life insurance company owned by cooperative organizations in Puerto Rico.

The rating actions reflect COSVI’s improved operating results, risk-adjusted capitalization as measured by Best’s Capital Adequacy Ratio and its strategic shift to stable and profitable lines of business. In 2010 COSVI reported positive net gains from operations as a result of the sale of its unprofitable group health plan and Medicare Advantage lines of business. However, residual losses from the run off of these businesses continue to impact the current year’s operating results. Additionally, COSVI’s risk-adjusted capitalization also has improved due to its positive operating results, reduced level of risk surrounding health lines of business and improvement in its capital and surplus funds. A.M. Best notes that the combined results of COSVI’s remaining lines of business, including life, annuities, credit life and individual accident and health, produced favorable statutory operating gains in the most recent period and increasing positive results are projected going forward. In addition, COSVI has the commitment of its members to support the entity’s financial flexibility.

Partially offsetting these positive rating factors are COSVI’s low risk-adjusted capitalization relative to its insurance and investment risks, somewhat high exposure to real-estate, mortgages, common stocks and leveraged capital structure, which is represented by sizeable amounts of surplus notes and preferred contribution of certificates.

The principal methodology used in determining these ratings is Best’s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Life and Health Insurers”; and “Equity Credit for Hybrid Securities.” Methodologies can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2010 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.

A.M. Best Co.
Eva Sverdlova, 908-439-2200, ext. 5733
Senior Financial Analyst
[email protected]
or
Raj Shah, 908-439-2200, ext. 5409
Assistant Vice President
[email protected]
or
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
[email protected]
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
[email protected]

Source: A.M. Best Co.