The ratings reflect Patria Re’s excellent risk-adjusted capitalization, low underwriting leverage, comprehensive enterprise risk management infrastructure, expansive knowledge of its core markets in
Offsetting these strengths is Patria Re’s relatively important participation of equities in its investment portfolio, which could add volatility to the company’s financial products. In addition, the company is expanding outside its niche market, which poses additional risks in terms of underwriting and implementation of such expansion strategy.
Patria Re has established a solid niche position in
At year-end 2015, the company registered a return on equity and return on assets of 8.5% and 5%, respectively, mainly supported by improved underwriting results and unrealized gains in its investment portfolio. While claims from catastrophe events, such as the earthquake in
While the company holds a larger percentage of its investment portfolio in equities in comparison with other peers, which could lead to higher volatility in its financial income, Patria Re historically has maintained such positions and keeps a long-term investment horizon for these assets. Given its prudent reserve practices and strong capital position, the company has not been required to materialize any unrealized losses from any of these investments to cover unusual deviations in claims arising from the catastrophic nature of its portfolio.
In 2015, Patria Re’s risk profile shifted as a result of its assumption of exposures outside of its core markets through
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Key insurance criteria reports utilized:
- A.M. Best’s Ratings On a National Scale (Version
Sept. 5, 2014)
- Analyzing Insurance Holding Company Liquidity (Version
March 25, 2013)
- Catastrophe Analysis in A.M. Best Ratings (Version
Nov. 3, 2011)
- Evaluating Country Risk (Version
May 2, 2012)
Insurance Holding Companyand Debt Ratings (Version May 6, 2014)
- Rating Members of Insurance Groups (Version
Dec. 15, 2014)
- Risk Management and the Rating Process for Insurance Companies (Version
April 2, 2013)
- Understanding Universal BCAR (Version
April 28, 2016)
View a general description of the policies and procedures used to determine credit ratings. For information on the meaning of ratings, structure, voting and the committee process for determining the ratings and monitoring activities, please refer to “Understanding Best’s Credit Ratings.”
- Previous Rating Date:
Oct. 7, 2015
- Date of Financial Data Used:
Sept. 30, 2016
This press release relates to rating(s) that have been published on
While the information obtained from the material source(s) is believed to be reliable, its accuracy is not guaranteed.
A.M. Best’s credit ratings are independent and objective opinions, not statements of fact.
Copyright © 2016 by A.M. Best Rating Services, Inc. and/or its subsidiaries. ALL RIGHTS RESERVED.
Associate Financial Analyst
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Director, Public Relations