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.
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
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 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
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
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