OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has upgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “bbb+” from “bbb” and affirmed the Financial Strength Rating of B++ (Good) of Popular Life Re (PLRe) (Puerto Rico). PLRE is a life insurance subsidiary of its ultimate parent, Popular, Inc. [NASDAQ: BPOP], a publicly traded bank holding company based in Puerto Rico. The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect PLRe’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
The ratings also reflect PLRe’s stable liability profile, strong return metrics and invested assets, which are of excellent credit quality and highly liquid. PLRe’s enterprise risk program has performed well under pressure from recent hurricanes and earthquakes and helped to keep impacts on performance as minor. PLRe remains strategically important to Popular, Inc., although the earnings contribution to the parent company is modest. Additionally, the company reinsures a portion of credit insurance policies on consumer loans originated at Banco Popular de Puerto Rico, as well as personal accident and health policies underwritten by unaffiliated insurers.
Partially mitigating rating factors include declining premium growth and geographic and product concentration risk, as credit life and accident and health business mostly is transacted in Puerto Rico, and challenges associated with difficulties structurally and economically following the natural disasters. However, AM Best notes that PLRe plans to seek opportunities to expand into Latin America as they grow in the region through its affiliated Popular Insurance, a Lloyd’s of London managing general underwriter. Although the Long-Term ICR upgrade reflects improvement in the credit profile of the parent company, Popular, Inc., which experienced strong financial performance in 2019, it still factors in ratings drag from continued economic pressures.
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