Fitch Ratings has affirmed Eurco Re Limited’s Insurer Financial Strength (IFS) Rating at ‘BBB’ with a stable outlook.
The rating rationale is based on Fitch’s opinion that Eurco Re would, if needed, receive support from its immediate parent, Dexia Insurance Belgium (now trading as Belfius Insurance) and potentially from Belfius Insurance’s own parent, Dexia Bank Belgium (now trading as Belfius Bank) (‘A-‘/Stable).
Belfius Bank is a leading Belgian bank owned by the Belgian state and Eurco Re performs a useful role as the group’s only active reinsurer with bank counterparties that are significant in Belfius Bank’s banking activities. As a result Fitch believes that, based on its ownership by Belfius Insurance and Belfius Bank, Eurco Re would likely benefit from support from the group if ever it were needed.
About 35% of Eurco Re’s gross premium income comes from intragroup business. In addition, its third party business ultimately derives from its position in Belfius Bank. Fitch therefore considers Eurco Re to be entirely dependent on the wider Belfius Bank group for business. In 2011 Eurco Re wrote around EUR250m of net premium income, little changed from 2010, and equal to around 10% of the group’s net premiums from insurance activities.
The key rating triggers that could result in a downgrade for Eurco Re include any reduction in Fitch’s view of potential support from Belfius Bank or Belfius Insurance, a material change in Eurco Re’s operations, or a downgrade of the parent. An upgrade is unlikely in the near term.
