AM Best Affirms Credit Ratings of Popular Life Re

Rhea-AI Summary

AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” (Good) for Popular Life Re (PLRe), a life insurance subsidiary of Popular, Inc. (NASDAQ: BPOP). The ratings outlook is stable, reflecting PLRe's very strong balance sheet strength and adequate operating performance. However, the weak credit profile of its parent company negatively impacts PLRe's ratings. Factors supporting PLRe's ratings include a strong Best's Capital Adequacy Ratio and a high-quality investment portfolio, enhancing liquidity. The limited growth in business, attributed to natural disasters and the COVID-19 pandemic, is a significant concern. Improved market conditions following Hurricane Maria may present future growth opportunities for PLRe.

Positive

• Affirmation of Financial Strength Rating of B++ and Credit Rating of bbb+ indicates stability.
• Very strong balance sheet strength supported by Best's Capital Adequacy Ratio.
• High-quality, marketable investment portfolio contributing to strong liquidity.

Negative

• Weak credit profile of Popular, Inc. drags on PLRe's ratings.
• Limited business growth due to past natural disasters and economic strain from COVID-19 pandemic.

OLDWICK, N.J.--(BUSINESS WIRE)-- AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” (Good) of Popular Life Re (PLRe) (Puerto Rico). PLRe is a life insurance subsidiary of its ultimate parent, Popular, Inc. [NASDAQ: BPOP], a publicly traded bank holding company based in Puerto Rico. The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect PLRe’s 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 weak credit profile of ultimate parent, Popular, Inc., continues to have a drag on the ratings lift/drag reflected in PLRe’s ratings.

PLRe’s balance sheet strength is driven by the strongest assessment, as measured by Best’s Capital Adequacy Ratio (BCAR), as well as a high quality and highly marketable investment portfolio, which lends to a strong liquidity position. PLRe remains strategically important to Popular, Inc., although the earnings contribution to the parent company is modest. Additionally, the company reinsures a portion of credit insurance policies on consumer loans originated at Banco Popular de Puerto Rico, as well as personal accident and health policies underwritten by unaffiliated insurers.

The company’s limited business profile offsets the favorable rating factors. There has been limited growth of business over the long term, which has been attributed to a series of natural events that include hurricanes and earthquakes, with the COVID-19 pandemic also creating economic strain on the island. With the release of funds earmarked from prior growth initiatives following Hurricane Maria, the economic forecasts lend to a more positive market condition over the extended future periods, and opportunities to grow business for PLRe may follow.

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.

Copyright © 2023 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230426005709/en/

Wayne Kaminski

Senior Financial Analyst

+1 908 439 2200, ext. 5061

wayne.kaminski@ambest.com



Edward Kohlberg

Director

+1 908 439 2200, ext. 5664

edward.kohlberg@ambest.com



Christopher Sharkey

Associate Director, Public Relations

+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.com



Al Slavin

Senior Public Relations Specialist

+1 908 439 2200, ext. 5098

al.slavin@ambest.com

Source: AM Best

FAQ

What are the current ratings of Popular Life Re?

AM Best affirmed a Financial Strength Rating of B++ and a Long-Term Issuer Credit Rating of bbb+.

What is the outlook of Popular Life Re's ratings?

The outlook is stable.

How does Popular Life Re's liquidity position look?

PLRe has a strong liquidity position due to a high-quality investment portfolio.

What challenges does Popular Life Re face in business growth?

PLRe faces challenges due to limited growth attributed to natural disasters and the COVID-19 pandemic.

How does the credit profile of Popular, Inc. affect Popular Life Re?

The weak credit profile of Popular, Inc. has a negative impact on the ratings of Popular Life Re.