Fitch Ratings has affirmed AG Insurance’s Insurer Financial Strength (IFS) rating at ‘A+’ and Long-term Issuer Default Rating (IDR) at ‘A’. Fitch has also affirmed the Long- and Short-term IDRs of the Ageas holding companies: ageas SA/NV, ageas N.V. and Ageas Insurance International N.V. (which merged with Ageas Insurance N.V. and ageas Utrecht N.V.). The agency has withdrawn the ratings of Brussels Liquidation Holding, ageas Utrecht N.V. and ageas Insurance N.V. as these entities no longer exist. The Outlooks on the IFS rating and the Long-term IDRs are Stable.
Fitch has also affirmed Ageas Insurance Company (Asia) Ltd’s (AICA) IFS ratings and Long-term IDRs, both with Stable Outlooks. Millenniumbcp-Ageas operating entities’ (MBCPA) IFS ratings remain on Rating Watch Negative (RWN). A full rating breakdown is provided at the end of this comment.
AG Insurance’s ratings continue to reflect its strong capital adequacy, leading business position in Belgium and healthy profitability. These strengths are offset by the company’s lack of geographical diversification. AG Insurance reported a net profit of EUR351m in 2010 compared with EUR432m in 2009, mainly due to lower non-recurring gains, higher weather-related claims and one-off losses on its bond portfolio. Fitch expects AG Insurance’s solvency to remain solid and that no exceptional dividend will be paid to the holding companies in the foreseeable future. Key rating drivers that could lead to an upgrade of AG Insurance include increased profitability in both the life and non-life segments. Conversely, deterioration in capital adequacy to a level significantly below 200% over a sustainable period could result in a downgrade.
AICA’s rating does not assume group support and reflects further strengthening of the company’s standalone capitalisation on a risk-adjusted basis through the continued accumulation of operating surplus. Stable investment returns, along with ongoing new business growth in the regular premium segment further underpinned the company’s operating profitability in 2010. Key rating driver that could lead to an upgrade of AICA include continued progress in increasing its market presence by further growing existing or new distribution channels. Conversely, deterioration in the local solvency margin to a level below 220% over a sustainable period could result in a downgrade.
The ratings of the Ageas holding companies continue to take into account the fact that they have more cash than needed to repay their debt. Nevertheless, Fitch believes that the holding companies face litigation risk as a consequence of the restructuring of the Ageas group, which is reflected by their IDRs being two notches lower than that of AG Insurance.
Source : Fitch Press Release
