NEW YORK--(BUSINESS WIRE)--Fitch Ratings has taken rating actions on the following Venezuelan reinsurance companies subsequent to the downgrade of the sovereign's Issuer Default Ratings (IDRs):
-- Provincial de Reaseguros, C.A. (Pro Re);
-- Americana de Reaseguros, C.A.;
-- Reaseguradora Delta, C.A.
A full list of rating actions follows at the end of this press release.
KEY RATING DRIVERS - PRO RE's INTERNATIONAL RATING
Pro Re's International Insurer Financial Strength Rating (IFS) rating has been downgraded 'CCC' from 'B' in line with the downgrade in Venezuela's sovereign rating also to 'CCC' from 'B' The reinsurer is directly exposed to issues constraining the sovereign rating level. The operating environment in Venezuela is a constraint to Pro Re's rating, domiciled in Venezuela and owned by local shareholders. In Fitch's view this is because the company has not achieved a sizeable international business diversification (only 3% of net premiums from sources outside of its home country as of June 2014).
KEY RATING DRIVERS - VENEZUELAN REINSURERS' NATIONAL RATINGS
Fitch has affirmed all Venezuelan reinsurers' National IFS ratings. The affirmations reflect Fitch's belief that credit fundamentals of these three reinsurers are still sufficiently strong and consistent with their current national rating levels. Their strong credit profiles reflect their high profitability levels, with combined ratios consistently below 100%, as well as their adequate capitalization and liquidity positions. In addition, none of these reinsurers hold high levels of government debt.
RATING SENSITIVITIES - INTERNATIONAL AND NATIONAL IFS RATINGS
A subsequent downgrade of the sovereign's IDRs would result in a similar action on the IFS ratings of these reinsurers, which are currently capped at the sovereign.
Additional government intervention that pressures the financial performance of these reinsurers could negatively affect their International and National IFS ratings.
Fitch considers that an upgrade to any of the reinsurers' ratings is unlikely in the near future, in light of current macroeconomic vulnerabilities.
Fitch has taken the following rating actions:
Provincial de Reaseguros, C.A.
--Long-term local currency IFS rating downgraded to 'CCC' from 'B';
--Long-term National IFS rating affirmed at 'A-(ven)'.
Americana de Reaseguros, C.A.
--Long-term National IFS rating affirmed at 'A-(ven)'.
Reaseguradora Delta, C.A.
--Long-term National IFS rating affirmed at 'A-(ven)'.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Insurance Rating Methodology - Global Master Criteria' (Sept. 4, 2014).
Applicable Criteria and Related Research:
Insurance Rating Methodology
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=756650
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=961575
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