AM Best


AM Best Affirms Credit Ratings of Reaseguradora Patria, S.A.


CONTACTS:

Inger Rodriguez
Associate Financial Analyst
+52 55 1102 2720, ext. 108
inger.rodriguez@ambest

Eli Sanchez
Associate Director, Analytics
+52 55 1102 2720, ext. 122
eli.sanchez@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Communications
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

MEXICO CITY - NOVEMBER 30, 2021 05:59 PM (EST)
AM Best has affirmed the Financial Strength Rating of A (Excellent), the Long-Term Issuer Credit Rating (Long-Term ICR) of “a” (Excellent) and the Mexico National Scale Rating of “aaa.MX” (Exceptional) of Reaseguradora Patria, S.A. (Patria Re) (Mexico). AM Best also has affirmed the Long-Term ICR of “bbb” (Good) of Patria Re’s ultimate parent, Peña Verde, S.A.B. (Peña Verde) (Mexico). The outlook of these Credit Ratings (ratings) is stable. Per AM Best’s criteria procedure on insurance holding companies, Peña Verde’s rating reflects a standard notching from Patria Re’s Long-Term ICR and is in line with companies of the same rating level.

The ratings reflect Patria Re’s balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

Patria Re’s strongest balance sheet assessment is supported by the same assessment on its risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), low underwriting leverage, robust reinsurance program and the company’s strong liquidity metrics. The ratings also reflect its comprehensive ERM infrastructure and expansive knowledge of its core markets in Latin America, which reflects the company’s smooth implementation of its expansion strategy with a stable overseas operation outside its niche market, even with the current limitations and economic consequences of the COVID-19 pandemic.

Partially offsetting these strengths is Patria Re’s operating performance, impacted by the volatile valuation of investments in recent years, due to economic volatility in Mexico and most recently due to COVID-19 pandemic, despite improvements in underwriting quality. The company has taken steps to alleviate concern related to the significant participation of equities in its investment portfolio and some catastrophe-prone lines of business, which could create volatility in the company’s operating performance, by shifting toward a more conservative investment strategy.

Patria Re has established a solid niche position in Mexico and Latin America, which allows it to accept profitable business selectively while maintaining a diversified product portfolio tailored to specific markets. This strategy has resulted in consistently favorable underwriting results over the years and has contributed to Patria Re’s enhanced risk-adjusted capitalization. A well-balanced reinsurance program placed among counterparties with a strong security level also reinforces the company’s risk-adjusted capitalization. Furthermore, the company’s underwriting leverage has remained at a conservative level for the past five years.

During 2020, the company reported negative bottom line results, limited by catastrophe reserve development; however, when these reserves are discounted, the results of the company would be positive, mainly driven by underwriting results. The company’s efforts to maintain stable claims and management expenses, coupled with strong underwriting practices, have resulted in a profitable first half for 2021, however, it remains limited by catastrophe reserve development.

The stable outlooks on Patria Re’s ratings are due to its ability to implement its business expansion strategy among a harsh Latin America insurance market, while maintaining its strongest level of risk-adjusted capitalization.

AM Best considers Patria Re to be well-positioned at its current rating level. Factors that could lead to positive rating actions include a continuous improvement in profitable underwriting and bottom line results, while maintaining its strongest level of risk-adjusted capitalization, as well as the continued and successful operation of its overseas expansion. Factors that may lead to negative rating actions include a sustained decline in profitability, significant deterioration in risk-adjusted capitalization and unsuccessful operations of the company’s overseas expansion plans.

The methodology used in determining these ratings is Best’s Credit Rating Methodology (Version Nov. 13, 2020), which provides a comprehensive explanation of AM 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:


  • Evaluating Country Risk (Version Oct. 13, 2017)

  • Understanding Global BCAR (Version July 22, 2021)

  • Catastrophe Analysis in A.M. Best Ratings (Version Oct. 13, 2017)

  • Available Capital & Holding Company Analysis (Version Oct. 13, 2017)

  • A.M. Best´s Ratings on a National Scale (Version Oct. 13, 2017)

  • Scoring and Assessing Innovation (Version March 5, 2020)

View a general description of the policies and procedures used to determine credit ratings. For information on the meaning of ratings, structure, voting and the committee process for determining the ratings and monitoring activities, please refer to Guide to Best’s Credit Ratings.


  • Previous Rating Date: Nov. 5, 2020

  • Date Range of Financial Data Used: Dec. 31, 2014-June 30, 2021

This press release relates to rating(s) that have been published on AM Best’s website. For additional 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.

AM Best does not validate or certify the information provided by the client in order to issue a credit rating.

While the information obtained from the material source(s) is believed to be reliable, its accuracy is not guaranteed. AM Best does not audit the company’s financial records or statements, or otherwise independently verify the accuracy and reliability of the information; therefore, AM Best cannot attest as to the accuracy of the information provided.

AM Best’s credit ratings are independent and objective opinions, not statements of fact. AM Best is not an Investment Advisor, does not offer investment advice of any kind, nor does the company or its Ratings Analysts offer any form of structuring or financial advice. AM Best’s credit opinions are not recommendations to buy, sell or hold securities, or to make any other investment decisions. View our entire notice for complete details.

AM Best receives compensation for interactive rating services provided to organizations that it rates. AM Best may also receive compensation from rated entities for non-rating related services or products offered by AM Best. AM Best does not offer consulting or advisory services. For more information regarding AM Best’s rating process, including handling of confidential (non-public) information, independence, and avoidance of conflicts of interest, please read the AM Best Code of Conduct. For information on the proper use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.


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AMB# Company Name
033224 Peña Verde, S.A.B.
086054 Reaseguradora Patria, S.A.