AM Best Revises Outlooks to Positive, Affirms Credit Ratings of BTG Pactual Resseguradora S.A. and BTG Pactual Seguros S.A.

MEXICO CITY--(BUSINESS WIRE)--AM Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” (Good) of BTG Pactual Resseguradora S.A. (BTG Re) (São Paulo, Brazil) and BTG Pactual Seguros S.A. (BTG Seguros) (São Paulo, Brazil). Concurrently, AM Best has affirmed the Brazil National Scale Rating (NSR) of “aaa.BR” (Exceptional) of BTG Re and BTG Seguros. The outlook of this NSR is stable.

The Credit Ratings (ratings) reflect BTG Re’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

The positive outlooks on these ratings reflect AM Best’s expectation that BTG Re will maintain its risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), supported by the initiatives implemented by its management.

BTG Re is a domestic reinsurer in Brazil, operating predominantly in the surety segments in Brazil, Latin America, and recently, in Portugal and Spain, as part of its expansion strategy. The company also recently entered the agricultural line through business assumed from its affiliated company, TOO Seguros S.A. BTG Re’s intermediate parent, Banco BTG Pactual S.A. (BTG Pactual) [B3: BPAC11], provides operational support and risk management capabilities and can provide liquidity if needed.

Also reflected in BTG Re’s ratings is the impact of its credit profile and Brazil’s challenging and volatile macroeconomic and political environment, which continues to hamper meaningful economic recovery and stability in the country. BTG Pactual has shown a consistent trend in its results and credit strength while expanding and diversifying its operations; however, BTG Re’s ratings are somewhat limited by its domestic operating environment.

BTG Re maintains solid standalone attributes in terms of operating performance, including low loss and expense ratios, and the strongest level of risk-adjusted capitalization, as measured by BCAR. BTG Re has produced positive earnings since inception, driven by underwriting results and investment income. BTG Re also benefits from a solid retrocession program that mitigates its underwriting exposures; the company’s reinsurance retention remains low.

BTG Seguros is a domestic insurer in Brazil, operating predominantly in the country’s surety segment. The company takes advantage of the business profile and market presence of its affiliated company, BTG Re, to which it cedes almost all of its risk.

BTG Seguros maintains adequate standalone attributes in terms of operating performance, including low loss and expense ratios, and the strongest level of risk-adjusted capitalization, as measured by BCAR. BTG Seguros has produced positive earnings in recent years, mainly driven by investment income. AM Best’s analysis of BTG Seguros and BTG Re benefits from BTG Pactual’s expertise, stemming from its long track record with a portfolio of large companies.

AM Best continues to monitor BTG Seguros and BTG Re’s balance sheet strength, operating performance, risk-adjusted capitalization and the execution of its product and geographic expansion, along with the credit profile of its parent.

Positive rating actions could take place if the company sustains its balance sheet strength at the strongest level or better in the intermediate term. Negative rating actions could take place if a deterioration in its business profile occurs due to volatility in the country’s economy, which could affect the company’s performance.

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 Performance Assessments, 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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