Fitch Affirms El Pacifico Vida (Peru) IFS at 'BBB'; Outlook Stable

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SANTIAGO, Chile & NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed the international scale local currency Insurer Financial Strength (IFS) rating of El Pacifico Vida Compania de Seguros y Reaseguros (Pacifico Vida) at 'BBB'. The Rating Outlook is Stable.

The rating reflects Pacifico Vida's strong position in the Peruvian market, pricing discipline, and well-diversified premium base. Pacifico Vida also has prudent assets/liability management and investment portfolio mainly concentrated in fixed-income investments.

While the company's operating leverage ratio is above the market average, it is important to note that it includes significant reserves backing the company's annuity business (59% of technical reserves) and the effects of the reserve requirements established by the regulator. Liabilities-to-equity ratio was 6.2 times (x) at March 31, 2011 and net retained premium-to-equity ratio was 1.17x in 2010.

Factors that could lead to favorable rating actions include improved capitalization and additional investment diversification. The factors that could lead to unfavorable rating actions include significant deterioration in capital adequacy, leverage ratios and/or financial performance, and a downgrade of Peru's sovereign rating.

In 2010 and the first quarter of 2011, Pacifico Vida produced good profitability driven by favorable underwriting and investment results. Investment management is a core part of its business activity.

Pacifico Vida's investment portfolio has adequate liquidity and is well-matched to liability duration and currency. The portfolio also carries limited credit risk with its allocation to Peruvian sovereign debt, international investment grade securities and well-regarded local issuer debt.

Additional information is available at 'www.fitchratings.com'

Applicable Criteria and Related Research

--'Insurance Rating Methodology' (March 31, 2011);

--'Life Insurance Rating Methodology' (March 31, 2011);

--'Insurance Industry: Global Notching Methodology and Recovery Analysis' (March 31, 2011);

--'Fitch's Approach to rating Insurance Groups' (Dec. 14, 2010).

Applicable Criteria and Related Research:

Insurance Rating Methodology

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=614266

Life Insurance Rating Methodology

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=612905

Insurance Industry: Global Notching Methodology and Recovery Analysis

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=614265

Fitch's Approach to Rating Insurance Groups

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=586765

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CONTACT:

Fitch Ratings
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Rodrigo Salas U., +56-2-499-3300
Senior Director
Fitch Chile Clasificadora de Riesgo Ltda.
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Santiago, Chile
or
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Director
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Managing Director
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