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 second-largest insurer overall with a market share of 25%. As of September 2021, life insurance composed 58% of the company’s business portfolio, with non-life insurance making up the remaining 42%. Its ultimate parent is Perú’s largest financial holding company, Credicorp Ltd. [NYSE: BAP], which had USD 66 billion in assets as of December 2020.
In 2020, PCS maintained its risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR); however, 2021 bottom line results have pressured its capital base. AM Best will continue to monitor the evolution of the 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. As of October 2021, the company has made underwriting adjustments in its sensitive business lines such as life, health and insurance related to pension funds to counter the current bottom line results.
The stable outlook reflects that recent price adjustments in lines affected by the COVID-19 pandemic, along with a higher vaccination rate in Peru will help stabilize the operating performance of the company and its capital base.
Negative rating actions could occur if the company’s underwriting results weaken, and result 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 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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