NOVEMBER 22, 2019 10:21 AM (EST)
AM Best Affirms Credit Ratings of BTG Pactual Resseguradora S.A.
FOR IMMEDIATE RELEASE
OLDWICK - NOVEMBER 22, 2019 10:21 AM (EST)
The ratings reflect BTG Re’s balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
BTG Re is a local reinsurer in Brazil, operating predominately in the surety segment, but expanding geographically and by line of business. The company’s parent, Banco BTG Pactual S.A. (BTG Pactual), has provided capital support, as well as operational and risk management capabilities.
Also reflected in the ratings of BTG Re is the impact of the credit profile of BTG Pactual and the challenging but slowly improving macroeconomic environment in Brazil. The credit profile of BTG Pactual, which faced significant operational and liquidity issues in 2015, has stabilized, and AM Best believes that a potential adverse impact on BTG Re’s operations is now more remote. Additionally, BTG Re maintains solid stand-alone attributes in terms of operating performance and risk-adjusted capitalization. BTG Re has been able to produce positive overall earnings since inception, driven by underwriting results and complemented by investment income. BTG Re also benefits from a solid retrocession program that mitigates its underwriting exposures.
Moreover, Brazil’s (re)insurance market is highly competitive with domestic and global reinsurers continuously accessing the market. BTG Re essentially acts as a captive reinsurer for its sister company, TOO Seguros S.A. (formerly known as Pan Seguros S.A.), which is 51% owned by BTG Pactual, and develops and expands its product offerings in the local markets, as well as in other Latin America countries, each with their own market characteristics. In Brazil, the surety market continues to expand with growth anchored in the judicial bond segment, with the long-term perspective of performance bonds bringing incremental demand from much-needed infrastructure projects.
AM Best continues to monitor BTG Re’s operating performance, risk-adjusted capitalization and the execution of its product and geographic expansion, in addition to the credit profile of its parent.
The key rating driver that could lead to a positive rating action for BTG Re is continued improvement and stability of the credit profile of BTG Pactual. Factors that could negatively pressure its ratings are the deterioration of its parent’s credit profile or liquidity position, or a decline in its risk-adjusted capitalization or the operating performance.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
AM Best is a global credit rating agency, news publisher and data provider specializing in the insurance industry. The company does business in more than 100 countries. Headquartered in Oldwick, NJ, AM Best has offices in cities around the world, including London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.