AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of "a-" (Excellent) of Pacífico Compañía de Seguros y Reaseguros S.A. (PCS) (Lima, Perú). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect PCS' balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The ratings of PCS also reflect the company's strong market share in Perú's insurance industry, as well as its comprehensive and well-diversified reinsurance program. Limiting the ratings is the adverse effect of the COVID-19 pandemic on Perú, specifically in the life insurance market, which PCS leads as the largest participant.

PCS is Perú's largest insurer overall with a market share of 32% (net premiums written), as of October 2022. Life insurance composes half of the company's business portfolio, with non-life insurance making up the remaining half. The company's ultimate parent is Perú's largest financial holding company, Credicorp Ltd. (NYSE:BAP), which had USD 61 billion in assets as of December 2021.

In 2021, PCS maintained its risk-adjusted capitalization at the strongest level, as measured by Best's Capital Adequacy Ratio (BCAR); however, bottom line results, in conjunction with higher-than usual dividend payouts, have pressured its capital base. AM Best will continue to monitor the development of the company's capital base as the economic cycle unfolds. PCS continues to benefit from risk mitigation achieved through diversification and a robust and comprehensive reinsurance program with highly rated reinsurers.

PCS has maintained adequate operating performance, despite the ongoing stress on results derived from the COVID-19 pandemic. During 2021, the company made underwriting adjustments in its sensitive business lines such as life, health and insurance related to pension funds to counter the stress on its bottom line results. These adjustments have materialized in visible improvements, which translated into profitable results as of October 2022.

The stable outlooks reflect the improvement in Pacifico's operating performance, resulting from price adjustments, which translates to stabilization of the company's capital base.

Negative rating actions could occur if the company experiences an unfavorable trend in underwriting performance that results in a constant reporting of net losses. Negative rating actions may also occur if the company's risk-adjusted capitalization decreases due to capital outflows or net losses.

This press release relates to Credit Ratings that have been published on AM Best's 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 Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best's Credit Ratings, Best's Performance Assessments, Best's Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best's Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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AM Best Affirms Credit Ratings of Pacífico Compañía de Seguros y Reaseguros S.A.