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Fitch affirms Provincial de Reaseguros' ratings with stable outlook

Fitch Ratings on Dec. 21 affirmed Provincial de Reaseguros CA's international and national insurer financial strength ratings at CCC and A-(ven), respectively, with a stable outlook.

In affirming the ratings, Fitch pointed to the company's "adequate technical performance with a combined ratio consistently below 100%, the robust growth in premiums collected, the increase in paid in capital and its adequate liquidity position."

Still, the rating agency expects Pro Re's financial performance to remain "highly influenced by its operating environment and vulnerable to political uncertainty in Venezuela." Fitch noted that the company's credit profile "is highly vulnerable" to further deterioration in Venezuela's credit quality, as the country accounts for 99.9% of the insurer's premium income and 6% of its assets are invested in sovereign debt.

Despite the pressure on the insurer's capital ratios due to its fast operations growth and unrealized gains amid real estate revaluations, Fitch said it views the increase of its paid in capital and its conservative dividend policy positively.

"Fitch expects Pro Re's profitability will continue to be determined by its capacity to maintain an adequate technical performance, given the low and volatile investment income, and the constant pressures from high inflation and new government regulations," the rating agency noted.