AM Best Affirms Credit Ratings of Pacífico Compañía de Seguros y Reaseguros S.A.
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 stable outlooks reflect resilience of PCS' balance sheet strength, despite macroeconomic concerns surrounding Peru's political landscape.
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.
PCS is Perú's second largest insurer with a market share of 24%, as of October 2024. Life insurance comprises a little over half of the company's business portfolio, with non-life insurance making up the remaining percentage. The company's ultimate parent is Perú's largest financial holding company, Credicorp Ltd. (NYSE:BAP), which had over USD 68 billion in assets as of December 2023.
PCS' risk-adjusted capitalization stands at the strongest level, as measured by Best's Capital Adequacy Ratio (BCAR); significant positive bottom-line results allowed the company to widen its capital base in the past few years. PCS continues to benefit from risk mitigation achieved through diversification in both its business and investment portfolios, as well as a robust and comprehensive reinsurance program with highly rated reinsurers.
PCS has maintained an adequate level of operating performance. Underwriting adjustments made by the company in its sensitive pension-fund related business lines such as life, health and insurance to counter stress from the effects of the COVID-19 pandemic resulted in visible improvements. This translated into significant profitable results by year-end 2022 and even stronger results during 2023, which continued to show a positive trend as of October 2024.
Positive rating actions could occur if the company is able to demonstrate a favorable, consistent trend in underwriting results that is supportive of a strong assessment for operating performance. Negative rating actions may occur if the company experiences an unfavorable trend in underwriting performance, which results in the constant reporting of net losses that impacts the company's risk-adjusted capitalization.
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.
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