A.M. Best Affirms Rating of Reaseguradora Patria

June 17, 2003

A.M. Best Co. has affirmed the financial strength rating of B++ (Very Good) of Reaseguradora Patria S.A. (Mexico City). The rating outlook is stable.

The rating reflects Patria’s good capitalization, solid balance sheet, excellent liquidity and experienced management team. Patria has a strong niche position in the Mexican and Latin American markets, which tends to benefit small well-capitalized reinsurers that are independent and can provide specific services to ceding companies. For the most part, Patria focuses on short-tail property/casualty coverage using its direct relationships and regional underwriting expertise, to better evaluate its risks. Financial results have improved recently due to the hardening reinsurance market and better underwriting performance.

Offsetting these positive rating factors are Patria’s limited worldwide market profile, restricted financial flexibility due to ownership and its high exposure to catastrophe losses.

The Latin American reinsurance market continues to suffer from increased natural catastrophes, and subsequent increase in retrocession rates is a challenge that the company faces in order to maintain its current underwriting results.

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