OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” (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 assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management. The weak credit profile of ultimate parent, Popular, Inc., continues to have a drag on the ratings lift/drag reflected in PLRe’s ratings.
PLRe’s balance sheet strength is driven by the strongest assessment, as measured by Best’s Capital Adequacy Ratio (BCAR), as well as a high quality and highly marketable investment portfolio, which lends to a strong liquidity position. 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.
The company’s limited business profile offsets the favorable rating factors. There has been limited growth of business over the long term, which has been attributed to a series of natural events that include hurricanes and earthquakes, with the COVID-19 pandemic also creating economic strain on the island. With the release of funds earmarked from prior growth initiatives following Hurricane Maria, the economic forecasts lend to a more positive market condition over the extended future periods, and opportunities to grow business for PLRe may follow.
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