A.M. Best Places Credit Ratings of Cooperativa de Seguros Multiples de Puerto Rico Under Review With Negative Implications; Changes Credit Ratings of Real Legacy Assurance Company, Inc. Following Regulatory Action
OLDWICK, N.J.--(BUSINESS WIRE)--Oct 1, 2018--A.M. Best has placed under review with negative implications the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a-” of Cooperativa de Seguros Multiples de Puerto Rico (CSM) (San Juan, PR). Concurrently, A.M. Best has changed the FSR to a Non-Rating Designation of E (Under Regulatory Supervision) from A- (Excellent) and the Long-Term ICR to “e” from “a-” of Real Legacy Assurance Company, Inc. (Real Legacy) (Guaynabo, PR), following the Office of the Commissioner of Insurance of Puerto Rico announcement on Sept. 28, 2018, that it placed Real Legacy under regulatory supervision. CSM and its wholly owned subsidiary, Real Legacy, collectively are known as Cooperativa Seguros Group.
The Credit Rating (rating) action for CSM follows the company’s recently filed second quarter statutory filings that reported a significant decline in policyholder surplus driven by adverse development on losses from Hurricane Maria of approximately $30 million. As a result of these increased losses, claims from Hurricane Maria subsequently exceeded the company’s available reinsurance protection. In addition, losses at the subsidiary level also exceeded the available reinsurance protection, resulting in a sizeable realized capital loss. The size of the additional catastrophe losses relative to amounts previously disclosed to A.M. Best drives further uncertainty regarding the effectiveness of CSM’s enterprise risk management program. While the company has a number of initiatives under consideration to improve capital, the ultimate effectiveness of these initiatives are uncertain. Accordingly, the ratings will remain under review pending A.M. Best’s analysis of CSM’s capital plans.
Real Legacy was placed under regulatory supervision (Puerto Rico) largely driven by considerable development on Hurricanes Irma and Maria losses. The Hurricane Irma and Maria losses significantly developed in the first half of 2018 by approximately $110 million, which exceeded the company’s reinsurance limits by approximately $70 million. Accordingly, as of June 30, 2018, the company’s policyholder surplus was negative $42 million.
This press release relates to Credit Ratings that have been published on A.M. 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 A.M. Best’s web page. For additional information regarding the use and limitations of Credit Rating opinions, please view . For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view .
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KEYWORD: UNITED STATES EUROPE NORTH AMERICA CARIBBEAN PUERTO RICO NEW JERSEY
INDUSTRY KEYWORD: PROFESSIONAL SERVICES FINANCE INSURANCE
SOURCE: A.M. Best
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PUB: 10/01/2018 03:28 PM/DISC: 10/01/2018 03:28 PM