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
AM Best also has affirmed the Long-Term ICR of 'bbb' (Good) of Patria Re's ultimate parent,
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.
The stable outlooks on Patria Re's ratings reflect Patria's ability to maintain stable profitability metrics and the strongest level of risk-adjusted capitalization, as measured by Best's Capital Adequacy Ratio (BCAR), while implementing its business expansion strategy amid challenging years faced by
Patria Re's strongest balance sheet assessment is supported by the same assessment on its risk-adjusted capitalization, as measured by 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
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
Patria Re has established a solid niche position in
During 2021, the company reported positive bottom-line results, despite limitations posted by catastrophe reserve development, 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 seven months for 2022; however, it remains limited by catastrophe reserve development.
AM Best considers Patria Re to be well-positioned at its current rating level. Factors that could lead to positive rating actions include a consistent improvement in profitability metrics underpinned by positive 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
Key insurance criteria reports utilized:
Evaluating Country Risk (Version
Understanding Global BCAR (Version
Catastrophe Analysis in AM Best Ratings (Version
Available Capital & Holding Company Analysis (Version
AM Best's Ratings on a National Scale (Version
Scoring and Assessing Innovation (Version
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.
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