AM Best Assigns Credit Ratings to BTG Pactual Seguros S.A.

AM Best has assigned a Financial Strength Rating of B++ (Good) and a Long-Term Issuer Credit Rating of “bbb+” (Good) to BTG Pactual Seguros S.A. (BTG Seguros) (Brazil). The outlook assigned to these Credit Ratings (ratings) is stable.

These ratings reflect BTG Seguros’ 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 stable outlooks are underpinned by the company's ability to maintain a very strong balance sheet strength assessment, supported by the positive performance of its holding company and the initiatives implemented by management.

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 Pactual Resseguradora S.A., to which it cedes almost all of its risk. The company’s 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 Seguros’ ratings is the impact of BTG Pactual’s credit profile and Brazil’s challenging and volatile macroeconomic and political environment, which continues to hamper meaningful recovery and stability in the country. BTG Pactual has shown consistent improvement in its results and credit strength while expanding and diversifying its operations; however, BTG Seguros’ ratings are limited somewhat by its domestic operating environment.

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 Best’s Capital Adequacy Ratio (BCAR). BTG Seguros has produced positive earnings in recent years, mainly driven by investment income. AM Best’s analysis of BTG Seguros benefits from BTG Pactual’s expertise, stemming from its long track record with a portfolio of large companies.

AM Best will monitor BTG Seguros’ 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.

Negative rating actions could take place if there is a deterioration in the company's risk adjusted capitalization due to major capital outflows. Also, negative rating actions could take place if the company's strategic relevance for the group diminishes. Although it is unlikely, positive rating actions could take place if the company continues to sustain a minimum strongest level of balance sheet strength.

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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