A.M. Best Downgrades Ratings of Cooperativa de Seguros de Vida de Puerto Rico and Places Ratings Under Review

CONTACTS:

FOR IMMEDIATE RELEASE

OLDWICK - MAY 13, 2015 02:18 PM (EDT)
A.M. Best has downgraded the financial strength rating to C+ (Marginal) from C++ (Marginal) and the issuer credit rating to "b-" from "b" of Cooperativa de Seguros de Vida de Puerto Rico (COSVI) (San Juan, PR). Additionally, A.M. Best has placed these ratings under review with negative implications.

The rating actions reflect the sharp deterioration of COSVI's risk-adjusted capital ratios reflective of the downgrading of Puerto Rico debt in February 2015 and April 2015. The National Association of Insurance Commissioners' (NAIC) Risk-Based Capital Ratio has deteriorated to unacceptable levels due to the much higher capital charges on certain Puerto Rico bond issues, which were downgraded to NAIC class 5. In response, COSVI intends to raise capital to more appropriate levels.

The under review with negative implications status reflects the uncertainty relating to COSVI's ability to meet the timeline and goals necessary to improve capital ratios as communicated. If COSVI's capital ratios fail to improve, further rating action may be taken by A.M. Best. Conversely, if COSVI improves its capital ratios significantly, A.M. Best will remove the rating from under review and re-evaluate the rating.

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:

• Equity Credit for Hybrid Securities


• Evaluating Country Risk


• Evaluating U.S. Surplus Notes


• Risk Management and the Rating Process for Insurance Companies


• Understanding BCAR for U.S. and Canadian Life/Health Insurers

This press release relates to rating(s) that have been published on A.M. 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 visit A.M. Best's Ratings & Criteria Center .

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.