RPT-Fitch Affirms R+V Lebensversicherung AG's IFS at 'AA-'; Upgrades Condor to 'AA-'
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Oct 9 (Reuters) - (The following statement was released by the rating agency)
Fitch Ratings has affirmed German life insurers R+V Lebensversicherung AG's (R+V Life) and R+V Lebensversicherung a.G.'s (R+V Mutual) Insurer Financial Strength (IFS) ratings at 'AA-'. The agency has simultaneously upgraded subsidiary Condor Lebensversicherungs-AG's (Condor) IFS rating to 'AA-' from 'A+'. The Outlook on all ratings is Stable.
KEY RATING DRIVERS
Based on its insurance group rating methodology, Fitch continues to view both R+V Life and R+V Mutual as "core" to the R+V group, and the ratings are therefore aligned with the agency's view of the R+V group as a whole. The agency has also revised its view on Condor to being "core" from "very important" to R+V. The revision is based on continued progress in Condor's integration within the group, Condor's increasing weight in R+V's Germany-based unit-linked business and the continuation of a profit-and-loss sharing agreement within the group.
The ratings are supported by the R+V group's solid capitalisation, strong market position, and strong operating performance. Offsetting these positive rating factors is the R+V group's geographical focus on Germany.
One of the top 10 insurance groups in Germany, R+V group is headed by R+V Versicherung AG, which is 74%-owned by DZ Bank AG (A+/Stable). DZ Bank AG is the largest central bank within Germany's cooperative banking sector Genossenschaftliche FinanzGruppe (GFG; A+/Stable). Fitch regards the ownership of R+V by DZ Bank AG/GFG as positive, reflecting the agency's view that the bank would support the insurance group, if necessary. This has been reflected in a single-notch uplift from the agency's standalone assessment of the R+V group.
R+V Life, R+V Mutual and Condor reported strong regulatory solvency margins at end-2012, well above the market average of 167%. Based on the regulatory ratios and the agency's internal risk-based capital assessment, Fitch views the companies' capitalisation as very strong. The agency expects that R+V Life, R+V Mutual and Condor will maintain their solid capital position in 2013 and 2014.
R+V Life, R+V Mutual and Condor reported a strong operating performance for 2012. Funds for future appropriation, premium and new business growth and the lapse ratio were better than the market average in 2012. Fitch expects the three companies to maintain strong profitability in 2013. The ratios of investments in equities for R+V Life and R+V Mutual are higher than the German market average of 2.8% while Condor's is in line with the average. Fitch does not view the relatively larger equity exposure as a particular risk, given their strong capitalisation.
The R+V group's primary insurance business is focussed on Germany. R+V Life is R+V group's main operating life insurer in Germany while Condor serves as a specialist for independent financial advisors in individual life and R+V Mutual serves as a specialist for mid- and high-net worth clients and pension funding. Measured by gross written premiums (GWP), R+V Life was Germany's second-largest life insurer in 2012.
Key rating triggers for a downgrade include a downgrade of GFG/DZ Bank AG's rating, a change in Fitch's view of R+V group's strategic importance to GFG/DZ Bank AG, a change in Fitch's view of the entities' core status within the R+V group, or a significant weakening of the R+V group's standalone financial profile.
Key rating triggers for an upgrade include an upgrade of GFG/DZ Bank AG's ratings, and the entities maintaining their strategic importance for R+V group and GFG/DZ Bank AG.
For 2012, R+V Life reported GWP of EUR4.7bn and total assets of EUR42bn, R+V Mutual GWP of EUR121m and total assets of EUR1.6bn and Condor GWP of EUR239m and total assets of EUR3.3bn.
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