AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of a- of Pacfico Compa±a de Seguros y Reaseguros S.A. (PCS) (Lima, Perº). The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect PCSs balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
The ratings of PCS also reflect the companys strong market share in Perus insurance market, as well as its comprehensive and well-diversified reinsurance program. Limiting the ratings is the competitive landscape in Peru, which has a limited number of insurers when compared with more developed markets.
PCS is Perus second-largest insurer with a market share of 26.5%. As of October 2018, the companys business portfolio was composed of 58% life and 42% non-life. Its ultimate parent is Perus largest financial holding company, Credicorp Ltd. [NYSE: BAP], which had USD 52.8 billion in assets as of December 2017.
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A year after consolidating its life and property/casualty (P/C) business into PCS, the company has been able to strengthen its risk-adjusted capitalization, as measured by Bests Capital Adequacy Ratio (BCAR). PCS benefits from risk mitigation achieved through diversification and a robust and comprehensive reinsurance program with highly rated reinsurers.
PCS has maintained its good operating performance post-merger, with life products naturally contributing to the result through investment products, while P/C products have performed significantly well with positive technical results. The company has been able to grow at a healthy rate, despite several market distortions, including catastrophe events, regulatory changes and important bids in the market, which can potentially distort overall growth in premiums too rapidly.
The stable outlooks reflect AM Bests confidence that the company can maintain its current operating performance while constantly strengthening its capital base. The unification of its P/C and life business also have provided operating efficiencies that AM Best will continue to monitor, along with market events as they evolve.
Positive rating actions could take place if the company is able to improve its operating results in the medium term, mainly guided by its efficiency efforts, while materially improving its risk-adjusted capitalization.
Negative rating actions could take place if the companys underwriting results weaken due to relaxed underwriting standards or a more aggressive risk appetite that could erode capital to levels that no longer support the net required capital for the risks the company faces.
This press release relates to Credit Ratings that have been published on AM Bests website. For all 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 Bests Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Bests Credit Ratings. For information on the proper media use of Bests Credit Ratings and AM Best press releases, please view Guide for Media – Proper Use of Bests Credit Ratings and AM Best Rating Action Press Releases.
AM Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit www.ambest.com for more information.
Copyright 2018 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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