A.M. Best Co. announced that it has affirmed the financial strength rating of “B++” (Very Good) and the issuer credit rating of “bbb+” of Mexican reinsurer Reaseguradora Patria, S.A. with a stable outlook.
“The rating reflects Patria’s strong risk-adjusted capitalization, favorable operating results and experienced management team,” said Best. “As a specialty reinsurer operating in Mexico and most of the other Latin American countries, Patria benefits from its long history in the region and its in-depth knowledge of individual markets.”
Best noted: “Patria focuses primarily on short-tail property and casualty coverage, including individual property, property catastrophe, marine, aviation, liability and life lines of business. The company continues to profit from a hard regional reinsurance market and the exit of some global reinsurers from the region.
“With the Latin American region prone to natural catastrophes, Patria has established a strong retrocessional program to protect its capital base. Retro reinsurance purchases are based on the company’s use of sophisticated catastrophe models, which determine the level of protection for both wind and earthquake catastrophes. However, due to Patria’s dependence upon retrocessional protection, operating results reflect an increased level of commission expense.
“Offsetting these factors are Patria’s limited market profile outside of Latin America, its relatively high expense structure and exposure to catastrophe losses. Furthermore, the company maintains a small capital base compared to competing global reinsurers.”
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