August 2, 2016 / 2:39 PM / 2 years ago

Fitch Affirms Reaseguradora Patria following Downgrade of Mexico's L-T IDRs; Outlook Stable

(The following statement was released by the rating agency) MONTERREY, August 02 (Fitch) Fitch Ratings has affirmed Reaseguradora Patria S.A.'s (Patria) International Insurer Financial Strength (IFS) rating at 'A-'. The Rating Outlook is Stable. The rating actions on Patria follow the downgrade of Mexico's Long-Term IDRs to 'BBB+' from 'A-'/Stable Outlook (for further information, see 'Fitch: Global Sovereign Rating Changes From Criteria Update', dated July 25, 2016, at'). KEY RATING DRIVERS Rating action reflects Patria's strong operating performance, geographical diversification and investment allocation. Patria has historically outperformed its peers in terms of capitalization levels and technical performance. Patria's geographical premium diversification is a competitive advantage. From June 2015 to June 2016, Patria's operation in Mexico represented 32% of earned premiums and the remaining 68% came from 70 countries. Despite local regulatory restrictions on investments outside Mexico, the investment portfolio is diversified and of high quality. As of December 2015, Mexican sovereign debt represented 59% of Patria's investment portfolio which equated to over 1.8x of Patria's equity (June 2016: 57% and 2.1x respectively). To mitigate Transfer and Convertibility (T&C) risk, 53% of Patria's premiums come from jurisdictions rated investment grade , 37% below investment grade and 10% not rated by Fitch. Also, company's book value invested portfolio in bonds is diversified by currency, 65% in dollars, 7% in euro, 2% in Mexican peso and 1% in UDI (value unit based on price change). RATING SENSITIVITIES Patria's ratings have limited upside potential in the short term given its relative small size in a market where large global players manage the largest share of the reinsurance market. Operating leverage ratio above 1.5x and recurrent high operating catastrophic and financial losses that undermine Patria's profitability and equity base may trigger a negative rating action. Negative movements on Mexico's country ceiling and sovereign rating may trigger a review of Patria's rating. Contact: Primary Analyst Eugenia Martinez Associate Director +5281 8399 9155 Fitch Ratings Mexico Prol. Alfonso Reyes 2612, Piso 8, Monterrey NL, 64920 Secondary Analyst Eduardo Recinos Senior Director +503 2516-6600 Committee Chairperson Julie Burke, CPA, CFA Managing Director +1-312-368-3158 Media Relations: Elizabeth Fogerty, New York, Tel: +1 (212) 908 0526, Email: Additional information is available on Applicable Criteria Insurance Rating Methodology (pub. 17 May 2016) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here _id=1009837 Solicitation Status here Endorsement Policy here ail=31 ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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