AM Best has affirmed a financial strength rating of B++ (Good) and a long-term issuer credit rating of "bbb+" (Good) for Patria Re (US), Inc. (Patria US), based in Charleston, South Carolina. Both ratings have a stable outlook.
The ratings reflect Patria US’ assessed "very strong" balance sheet strength, along with its "adequate" operating performance, "limited" business profile, and "appropriate" enterprise risk management (ERM). The ratings also recognize Patria US’ strategic importance to its parent company, Peña Verde, S.A.B., a major player in Mexico's insurance and reinsurance markets.
Peña Verde's affiliation provides operational synergies and efficiencies to Patria US. The company benefits from the support of its sister entity, Reaseguradora Patria, SA (Patria Re), the lead company of the Peña Verde group, which is well-established in Latin America’s reinsurance sector. As of June 2024, Peña Verde held equity of $744 million and premiums of $464 million.
Patria US, which began operations in February 2023 after receiving regulatory authorization from the South Carolina Department of Insurance, was created as part of Peña Verde's expansion strategy. AM Best views the company’s balance sheet strength as "very strong," with its capital base expected to grow through planned capital contributions.
The most recent of these was an $8.5 million contribution in September 2024 from its parent company. AM Best will monitor these capital inflows to assess Patria US’s growth and its ability to handle its planned risk levels.
Patria US’ operating performance is assessed as "adequate", with its initial portfolio primarily comprising retroceded premiums from Patria Re, which has a history of profitability. The affiliation with Patria Re and the smaller size of Patria US's operations are expected to maintain stable operating expenses.
As of September 2024, Patria US reported positive earnings, driven by sufficient premium levels. AM Best said that it will continue to monitor underwriting and expense metrics as key performance indicators.
While Peña Verde and Patria Re have an established position in the Mexican and broader Latin American markets, Patria US's business profile is described as "limited" due to its defined role within the group. It benefits from the group’s ERM framework and expertise from shared management, with AM Best considering the ERM structure "appropriate" for the company’s risk profile, further supported by Peña Verde’s administrative resources.
The stable outlook reflects the capital support Patria US receives from the group, which includes capital infusions as necessary and profitable business transfers in alignment with the group’s strategy.
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