Moody’s upgrades Rimac Seguros

Moody's Investors Service has upgraded Rimac Seguros y Reaseguros, the largest Peruvian insurer.

Rimac’s insurance financial strength (IFS) rating was upgraded to Baa2, from Baa3. The rating outlook is now stable.

According to Moody's, the upgrade of Rimac's rating is based primarily on the company's improving investment diversification solid profitability and sustained leadership in the Peruvian insurance market.

It also noted that the upgrade reflects an improvement in Peru's sovereign credit profile (Government of Peru senior debt upgraded to A3 from Baa2 on 2 July 2014) and on its improving insurance operating environment.

The “positive developments remain tempered by the insurer's high underwriting exposures to natural catastrophes (which are partly reinsured) and geographic business concentration, which constrains the insurer's capital adequacy profile, given Perú's location along the Andes cordillera and Pacific coastline, by its weak reserve adequacy profile, in part reflecting Peru's still evolving actuarial reserving standards, by the company's potential spread-compression and reinvestment risk on its annuities, and by Peru's still weak (Ba-level) insurance operating environment,” said the rating agency.