AM Best has upgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “bbb+” (Good) from “bbb” (Good) and revised the Long-Term ICR to stable from positive and affirmed the Financial Strength Rating (FSR) of B++ (Good) of BTG Pactual Resseguradora S.A. (BTG Re) (Brazil). The outlook of the FSR is stable.

The Credit Ratings (ratings) reflect BTG Re’s balance sheet strength, which AM Best assesses at the very strong level, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

The stable outlooks on these ratings reflect AM Best’s expectation that BTG Re will maintain its balance sheet strength assessment at the very strong level, supported by the positive performance of its holding company and the initiatives implemented by the management.

BTG Re is a domestic reinsurer in Brazil, operating predominantly in the surety segments in Brazil, Latin America, and recently, in Portugal and Spain, as part of its expansion strategy. The company also recently entered the agricultural line through business assumed from its affiliated company, TOO Seguros S.A. BTG Re’s parent, Banco BTG Pactual S.A. (BTG Pactual) [B3: BPAC11], provides operational support and risk management capabilities and can provide liquidity if needed.

Also reflected in BTG Re’s ratings is the impact of its credit profile and Brazil’s challenging and volatile macroeconomic and political environment, which continues to hamper meaningful recovery and stability in the country. BTG Pactual has shown consistent improvement in its results and credit strength while expanding and diversifying its operations; however, BTG Re’s ratings are limited somewhat by its domestic operating environment.

BTG Re maintains solid standalone attributes in terms of operating performance, including low loss and expense ratios, and the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). BTG Re has produced positive earnings since inception, driven by underwriting results and investment income. BTG Re also benefits from a solid retrocession program that mitigates its underwriting exposures; the company’s reinsurance retention remains low. AM Best’s analysis of BTG Re benefits from BTG Pactual’s expertise, stemming from its long track record with a portfolio of large companies.

AM Best continues to monitor BTG Re’s balance sheet strength, operating performance, risk-adjusted capitalization and the execution of its product and geographic expansion, along with the credit profile of its parent.

Positive rating actions could take place if the company sustains its balance sheet strength at the strongest level or better in the intermediate term. Negative rating actions could take place if a deterioration in its business profile occurs due to volatility in the country’s economy, which could affect the company’s performance.

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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