Fitch Ratings has affirmed Germany-based insurers ERGO Lebensversicherung AG’s (ERGO Life) and DKV Deutsche Krankenversicherung AG’s (DKV) Insurer Financial Strength (IFS) ratings at ‘AA-‘. The agency has simultaneously affirmed VORSORGE Lebensversicherung AG’s (Vorsorge) and Europaeische Reiseversicherung AG’s (ERV) IFS ratings at ‘A+’. The Outlooks on all the ratings are Stable.
ERGO Life, DKV, Vorsorge and ERV are operating insurance companies and 100% subsidiaries of the holding company, ERGO Versicherungsgruppe AG (ERGO). Fitch has also affirmed ERGO’s Long-term Issuer Default Rating (IDR) at ‘A+’ with a Stable Outlook.
The rating actions follow the agency’s affirmation of Munich Re’s IFS rating at ‘AA-‘ (see “Fitch Affirms Munich Re’s IFS Rating at ‘AA-‘; Outlook Stable”, dated 25 May 2012 on www.fitchratings.com.) Munich Re is ERGO’s 100% shareholder.
ERGO’s ratings reflect its core status within Munich Re’s operations. ERGO Life and DKV are viewed by Fitch as core to ERGO in terms of their size and strategic importance. Vorsorge and ERV are viewed by Fitch as very important to ERGO as defined within Fitch’s group rating methodology. Vorsorge’s and ERV’s rating benefit from a two notch uplift from their stand-alone credit profile.
Key rating drivers for all ratings are the strategic importance of the companies within the Munich Re group and the fact that any change of Munich Re’s rating would result in a change of ERGO’s and its subsidiaries’ ratings.
ERGO is the primary insurance group of Munich Re. At year-end 2011, ERGO had total assets of EUR139.3bn (2010: EUR139.3bn) and reported net income of EUR349.4m (2010: EUR355.2m). Fitch expects that ERGO’s reported net income will remain stable in 2012. Fitch also expects that ERGO will maintain its strong underwriting profitability in its German non-life business and will achieve further improvements in its international underwriting profitability in 2012.
