The ratings reflect PaCReís excellent risk-adjusted capitalization as measured by Best's Capital Adequacy Ratio (BCAR), its experienced underwriting team, and independent management by
Partially offsetting these positive rating factors is the start-up nature of PaCRe along with the greater investment risk that is associated with this type of investment strategy. In addition, PaCRe's business plan will be challenged by established reinsurers as well as other alternative investment reinsurers entering the market, and more capacity into an already overcapitalized reinsurance marketplace could pressure underwriting margins.
Rating factors that could result in positive rating actions would be PaCRe meeting and/or exceeding its business plan over the long term.
Rating factors that could result in negative rating actions would be PaCRe not executing its business plan over the long term and/or if the company experiences outsized underwriting or investment losses.
The methodology used in determining these ratings is Bestís Credit Rating Methodology, which provides a comprehensive explanation of A.M. Bestís rating process and contains the different rating criteria employed in the rating process. Bestís Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
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Senior Financial Analyst
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