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Moody's affirms Swiss Re Brasil Seguros' ratings

Moody's on May 30 affirmed Swiss Re Corporate Solutions Brasil Seguros S.A.'s Baa3 global local currency insurance financial strength rating.

The rating agency also affirmed the insurer's Aaa.br national scale insurance financial strength rating.

The outlook is stable.

In affirming the ratings, Moody's noted that while it recently lowered its outlook on the Brazilian sovereign, it maintained a stable outlook for Swiss Re Brasil based mainly on "the strong support" from parent company Swiss Re Corporate Solutions Ltd., which it said mitigates downward rating pressure on the Brazilian unit.

"The support has been demonstrated by the sharing of the parent's brand name and explicit financial support, including capital contributions in recent years and significant reinsurance support through quota share and excess-of-loss contracts," Moody's added. "Consequently, we expect that [Swiss Re Brasil's] ratings would not be downgraded in the event that Brazil's issuer and bond ratings were downgraded by one notch."

The ratings affirmation also reflects the company's stable credit profile, as it has reasonably good product diversification and has seen improved profitability in recent years to bolster internal capital generation..

However, these gains are countered by modest penetration in the local general insurance market, asset concentration in Brazilian sovereign bonds, and Brazil's moderate operating environment, it added.