AM Best affirms credit ratings of Popular Life Re
The outlook for Popular Inc.’s reinsurance subsidiary in Puerto Rico is stable, according to the credit rating agency.
AM Best, the credit rating agency that focuses on the insurance industry, has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” (Good) for Popular Life Re (PLRe), a life reinsurance subsidiary of Puerto Rico-based Popular Inc.
The outlook of these credit ratings remains stable, according to AM Best.
“The ratings reflect PLRe’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management,” agency stated.
However, “the weak credit profile of ultimate parent, Popular Inc., continues to have a drag on the ratings lift/drag reflected in PLRe’s ratings,” AM Best noted.
PLRe’s balance sheet strength is underpinned by the highest rating from Best’s Capital Adequacy Ratio (BCAR), along with a “high-quality and highly marketable investment portfolio,” contributing to a strong liquidity position.
While PLRe remains strategically important to Popular Inc. its contribution to the parent company’s earnings is modest, the credit rating company noted.
PLRe also reinsures a portion of credit insurance policies on consumer loans that originate from Banco Popular de Puerto Rico and personal accident and health policies underwritten by unaffiliated insurers.
“The company’s limited business profile offsets the favorable rating factors. One of the primary attributes of the business is the company’s limited geographic profile as it primarily operates in Puerto Rico,” AM Best stated.
There also is a significant reliance on sourcing business through Popular Inc. and its banking relationships, the credit rater added.
