Fitch Ratings on Dec. 20 affirmed Reaseguradora Patria SAB's international insurer financial strength rating at A-, while revising the rating outlook to negative from stable.
The rating actions follow the revision of Mexico's sovereign rating outlook to negative from stable earlier in December.
Reaseguradora Patria's rating reflects the company's strong operating performance, geographical diversification and investment allocation. A revision of Mexico's sovereign rating impacts the firm's rating since the company's insurer financial strength rating is treated as a foreign currency obligation due to its approximately 68% premium concentration in 70 countries.
Although Mexican insurance regulations restrict investments outside Mexico, Patria's portfolio is still diversified and of high quality, Fitch noted. Approximately 58% of the company's investment portfolio, at book value, is invested in federal bonds that are diversified by currency.
Patria's ratings have limited upside potential in the short term given its relatively small size in a market where large global players manage the largest share of the reinsurance market, the rating agency said.