AM Best Assigns Credit Ratings to Popular Re, Inc.

AM Best has assigned a Financial Strength Rating of B++ (Good) and a Long-Term Issuer Credit Rating of “bbb” (Good) to Popular Re, Inc. (Popular Re) (Puerto Rico). The outlook assigned to these Credit Ratings (ratings) is stable.

The ratings reflect Popular Re’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM). The weak credit profile of the ultimate parent, Popular, Inc., has a drag on the ratings lift/drag reflected in Popular Re’s ratings.

The ratings also consider Popular Re’s role as the property/casualty reinsurer for Popular, Inc., Puerto Rico’s largest financial institution, which also has branches in the Virgin Islands and Mainland United States. Popular Re began operations in 2022 and participates in Popular, Inc.’s reinsurance program as an insurer and reinsurer, in various property/casualty lines of business. The captive is a strategic component in the organization’s risk management framework.

AM Best assesses Popular Re’s balance sheet as strong, supported by risk-adjusted capitalization at the very strong level, as measured by Best’s Capital Adequacy Ratio (BCAR), conservative investment portfolio, and favorable liquidity metrics. Loss reserves are adequate and are carried at the actuary’s midpoint, but reserve history is short, and some lines have a long tail.

The adequate operating performance is supported by modest after-tax measures driven mostly by investment income. Although the average combined ratio is higher than its peers in the initial phase, Popular Re is expected to report underwriting profitability over the next year.

Popular Re’s limited business profile assessment is due to its geographic concentration of risk; however, the captive writes several financial lines and property lines for its parent. AM Best assesses the company’s ERM as appropriate and is fully integrated into Popular, Inc.’s program.

AM Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated in the United States and throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.

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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