Fitch Affirms BTG Pactual Seguradora and BTG Pactual Resseguradora IFS Ratings; Outlook to Positive

  Fitch Affirms BTG Pactual Seguradora and BTG Pactual Resseguradora IFS
  Ratings; Outlook to Positive

Business Wire

RIO DE JANEIRO & NEW YORK -- February 3, 2014

Fitch Ratings has affirmed the Insurer Financial Strength (IFS) ratings of BTG
Pactual Seguradora S.A. (BTG Seguradora) and BTG Pactual Resseguradora S.A.
(BTG Resseguradora), and revised the Outlooks on the ratings to Positive from
Stable. The rating action follows the recent revision of the outlook on the
ratings of their parent Banco BTG Pactual S.A. (BTG Pactual; local currency
long-term IDR 'BBB-'/Outlook Positive). For further details, please see the
press release titled 'Fitch Affirms BTG Pactual Group's Ratings; Outlook
Revised to Positive' published on Fitch's website on Jan. 27, 2014. A full
list of the actions is detailed at the end of this release.

KEY RATING DRIVERS

The IFS ratings of BTG Seguradora and BTG Resseguradora are based on support
from their ultimate parent, BTG Pactual. Both companies are wholly owned
subsidiaries of BTG Pactual Holding de Seguros S.A., which is fully owned by
BTG Pactual.

As per its rating criteria 'Rating FI Subsidiaries and Holding Companies',
Fitch considers both BTG Seguradora and BTG Resseguradora as strategically
important subsidiaries of BTG Pactual, due to the strong synergies and high
level of management and operational integration, largely fungible capital,
full ownership, and common branding. In assessing support, Fitch views
positively the close alignment of the current and target client base of the
new insurance operations to that of BTG Pactual, and the fact that they are
part of its strategy to provide full range of services to its customer base.

BTG Seguradora and BTG Resseguradora operate from BTG's main offices and are
considered a division of the bank. Therefore, they benefit from expense
synergies, the bank's information technology platform, internal controls and
corporate governance structure, as well as its solid local and international
reputation. The ownership structure also provides potential access to the
parent's wide range of clients and cross selling opportunities for the group.

BTG Seguradora

BTG Seguradora started underwriting in February 2013. Its main focus is on
surety (60% of premiums in November 2013), which is complemented by
engineering risks (10%). It also participates in the DPVAT (mandatory
third-party liability for road accidents) consortium (30%). In November 2013,
with BRL58 million surety premiums underwritten, its market share in the
segment was 6% (ranking 6th).

The insurer plans to start underwriting in other segments related to
infrastructure (such as hull and petroleum) over the short to medium term, but
the core focus will remain surety.

According to preliminary figures, BTG Seguradora accumulated a loss of BRL3
million through November 2013. The negative result was due to both technical
and financial income losses. The former is normal at the early stage of
operations due to heavy technical reserve accumulation, while the latter is
explained by the unrealized mark-to-market losses on the long term securities
in the investment portfolio. Claims in the surety and engineering segment were
well below the market averages.

Fitch expects technical results to gradually improve in 2014 with the
stabilization of technical reserve development, however, given the
expectations for further interest rate increases, there could be more losses
in the investment portfolio.

BTG Resseguradora

BTG Resseguradora is BTG Seguradora's captive reinsurer. It started operations
in May 2013, with BRL100 million capital. It has one statutory employee and
only reinsures premiums ceded by BTG Seguradora. As a reinsurer, BTG
Resseguradora is not subject to regulatory maximum retention limits per risk,
and therefore offers a significant growth potential for the group.

BTG Resseguradora's growth will be directly linked to BTG Seguradora in the
short term. Thereafter, within the next one to two years, the reinsurer plans
to obtain licenses from the authorities in Colombia, Peru, Chile and
Argentina, offering reinsurance services for Brazilian companies operating in
these countries. In the next stage of its business plan, in three to four
years, it aims to become a full reinsurance company reinsuring premiums from
all segments in Brazil. BTG Pactual's BRL250 million capital injection in
August 2013 demonstrates its commitment to the future development of the
reinsurance company.

According to preliminary figures, in November 2013, BTG Resseguradora's
reinsurance premiums (net of commissions) reached BRL36 million (about 1% of
local reinsurance market premiums) and leverage remains very low (net
liabilities/equity was about 10%). The reinsurer accumulated profits of BRL8.1
million through November 2013, mainly stemming from the financial income in
the investment portfolio.

RATING SENSITIVITIES

Changes in parent's ratings: Changes in BTG Pactual's ratings or propensity to
support its subsidiaries would affect the ratings of BTG Seguradora and BTG
Resseguradora.

Changes in strategic importance: Changes in Fitch's evaluation of the
strategic importance of BTG Seguradora and BTG Resseguradora could lead to
changes in their ratings.

Fitch has taken the following rating actions:

BTG Seguradora:

--National IFS affirmed at 'AA-(bra)'; Outlook revised to Positive from
Stable.

BTG Resseguradora:

--International IFS affirmed at 'BB+'; Outlook revised to Positive from
Stable;

--National IFS affirmed at 'AA-(bra)'; Outlook revised to Positive from
Stable.

Additional information available at 'www.fitchratings.com' or
'www.fitchratings.com.br'.

Applicable Criteria and Related Research:

-- Insurance Rating Methodology (November 2013);

-- National Ratings Methodology (October 2013);

-- Rating FI Subsidiaries and Holding Companies (August 2012);

-- Fitch Affirms BTG Pactual Group's Ratings; Outlook Revised to Positive
(January 2014);

-- BTG Pactual Resseguradora (September 2013);

-- BTG Pactual Seguradora (September 2013).

Applicable Criteria and Related Research:

Insurance Rating Methodology -- Amended

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=723072

Rating FI Subsidiaries and Holding Companies

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679209

BTG Pactual Resseguradora S.A.

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=717539

BTG Pactual Seguradora S.A.

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=717704

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=819170

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Contact:

Fitch Ratings
Primary Analyst
Esin Celasun
Associate Director
+55-21-4503-2626
Fitch Ratings Brasil Ltda., Praca XV de Novembro, 20 - 401 B, Rio de Janeiro,
RJ, Brazil
or
Secondary Analyst
Rodrigo Salas
Senior Director
+56 2 499-3300
or
Committee Chairperson:
Franklin Santarelli
Managing Director
+1-212-908-0364
or
Media Relations:
Jaqueline Carvalho, +55 21 4503 2623 (Rio de Janeiro)
jaqueline.carvalho@fitchratings.com
Elizabeth Fogerty, +1-212-908-0526 (New York)
elizabeth.fogerty@fitchratings.com
 
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