A.M. Best Upgrades Ratings of Popular Life Re

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OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has upgraded the financial strength rating to B+ (Good) from B (Fair) and issuer credit rating to “bbb-” from “bb+” of Popular Life Re (San Juan, Puerto Rico). The outlook for both ratings is stable. Popular Life Re is a life reinsurance subsidiary of its ultimate parent, Popular Inc., a publicly traded bank holding company based in Puerto Rico.

The rating actions reflect Popular Life Re’s continued stable statutory net income as the company continues to maintain solid capitalization ratios. While premium volume has declined in recent years, results reported to date indicate a modest increase reflecting some stabilization in the Puerto Rican economy, which has reported a contraction in gross domestic product growth in recent years. Going forward, A.M. Best believes premium volumes will remain highly correlated to the Puerto Rican economy and increases in consumer loan origination activity.

The ratings also incorporate some improvement in Popular Life Re’s parent, which has strengthened its balance sheet through capital raises and return to profitability. Additionally, there has been some improvement in the credit quality of Popular Inc.’s balance sheet through strategic restructurings and asset sales in recent years. Nevertheless, Popular Life Re’s ratings continue to factor in the weak, albeit improving, financial condition of Popular Inc. Specifically, elevated loan delinquencies at each of Popular Inc.’s banks and nonperforming assets remain a rating concern. A.M. Best expects that continued slow economic growth in Puerto Rico still has the ability to pressure the pace of improvements to Popular Inc. in the near-to-intermediate term.

A.M. Best believes Popular Life Re is an important subsidiary, as it represents an extension of Popular Inc.’s well established insurance agency business, which operates under the brand name Popular Insurance. Popular Life Re reinsures a portion of credit policies on consumer loans originated at Banco Popular de Puerto Rico, as well as personal accident and health policies underwritten by unaffiliated carriers.

The principal methodology used in determining these ratings is Best’s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilized include: “Understanding BCAR for Life and Health Insurers”; “Risk Management and the Rating Process for Insurance Companies”; and “Assessing Country Risk.” Methodologies can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

CONTACT:

A.M. Best Co.
Anthony McSwieney, 908-439-2200, ext. 5715
Senior Financial Analyst
anthony.mcswieney@ambest.com
or
Rosemarie Mirabella, 908-439-2200, ext. 5892
Managing Senior Financial Analyst
rosemarie.mirabella@ambest.com
or
Carole Lovell, 908-439-2200, ext. 5445
Public Relations Associate
carole.lovell@ambest.com
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com