OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb+” 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 assesses 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 continued pressure from recent pandemic, 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 in recent years and geographic 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 it grows in the region through its affiliate Popular Insurance, a Lloyd’s of London managing general underwriter. Although the Long-Term ICR reflects improvement over the past couple of years in Popular, Inc.’s credit profile, it still factors in ratings drag from continued economic pressures.
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