Fitch Affirms Reaseguradora Patria’s Ratings at ‘BBB+’ and ‘AAA(mex)’; Outlook Stable

SAN SALVADOR, El Salvador & NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed Reaseguradora Patria, S.A.B.'s (Patria) local currency Insurer Financial Strength (IFS) rating at 'BBB+' and national scale IFS rating at 'AAA(mex)'. The Outlook for both ratings remains Stable.

The ratings reflect the relatively high capitalization levels, the benefit of reinsurance support and financial flexibility provided by a diversified and strong pool of retrocessionaires. The ratings also factor the company's ample and rising technical and catastrophic reserves base. Capitalization, reserves and retrocession coverage at Reaseguradora Patria S.A.B. is expected to remain strong during 2012.

On the other hand, the company maintains relatively low liquidity ratios due to a high and growing proportion of stocks in its portfolio. However, the company's investment policy is seen by Fitch as conservative and well structured, as it focuses on fixed income investments, mainly from the Government and Central Bank of Mexico, and the acquisition and holding of credit quality low risk stocks.

Patria continues to have a strong profile in the Latin American insurance markets as a leading underwriter of a well diversified portfolio of P&C and life insurance business providing operating and catastrophic coverage. By operating in almost all Latin American sub regions, mainly Mexico and Central America, Patria has been able to scatter its concentration risk.

Patria's underwriting policies have remained fairly conservative, achieving in 2011 a loss ratio reduction of 4.2%, despite a very challenging year in Latin America during 2011. The the company's adequate margins are the result of both good operating and financial profits. The company posted a combined ratio of 93.3% and an operating ratio of 79.9%.

Patria is expected to report a solid combined ratio in 2012, similar to the 93% achieved in 2011 due principally to solid growth in profitable businesses and markets, some rate adjustments, and a stable loss ratio. Although international market conditions remain competitive for the company's core lines of business, modest rate increases have been achieved in the last year.

On the other hand, a strong net investment yield is expected, reflecting the above mentioned rising reserves base, the Mexican financial market's good performance, and the credit quality and diversification of Patria's investment portfolio.

Fitch expects the company to maintain its focus on entering new markets and reducing risk exposure as part of its overall underwriting strategy. Patria has extensive experience in risk management and efficient resource allocation.

Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Insurance Rating Methodology' (Sept. 22, 2011).

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Fitch RatingsBrian Bertsch, +1-212-908-0549
Media Relations, New York
[email protected]
or
Primary Analyst:Eduardo Recinos, +503-2516-6606
Senior Director
Fitch, Inc.
San Salvador, El Salvador
or
Secondary Analyst:Milena Carrizosa, +57 1 326-9999
Director
or
Committee Chairperson:Franklin Santarelli, +1-212-908-0739
Managing Director

Source: Fitch Ratings