RPT-Fitch Affirms Allianz SE at 'AA-'; Outlook Stable

Fri Mar 14, 2014 6:58am EDT

March 14 (Reuters) - (The following statement was released by the rating agency)

Fitch Ratings has affirmed Germany-based Allianz SE's Insurer Financial Strength (IFS) rating and Long-term Issuer Default Rating (IDR) at 'AA-'. At the same time, the agency has affirmed Allianz's main subsidiaries' IFS rating at 'AA'. The Outlook for all ratings is Stable. A full list of rating actions is provided at the end of this commentary.

KEY RATING DRIVERS

The affirmation reflects Allianz's strong technical profitability, strong consolidated group capital position, broad diversification by geography and product, and solid business position in its key markets. In addition, the group's ratings also benefit from an investment mix of sound credit quality. Partially offsetting these rating factors are currently suppressed technical profitability in the non-life business segment in the US and a challenging medium-term outlook for some of Allianz's life markets.

The subdued outlook for economic growth in the eurozone, low interest rates and a possible re-intensification of the peripheral eurozone debt crisis create a challenging operating environment. For 2014 Fitch expects that sound underwriting profitability from the non-life business will help Allianz offset the effects of likely pressure on earnings from life insurance and investments. The group's strong core capitalisation remained comfortable in 2013 with shareholders' funds of EUR50.1bn (2012: EUR50.4bn restated) and the consolidated regulatory solvency ratio improving to 182% (2012: 181%, when adjusted for accounting changes).

For 2013 Allianz reported an operating profit of EUR10.1bn (+7.8%), composed of EUR5.3bn (+14.2%) from property/casualty insurance, EUR3.2bn (+7%) from asset management, and EUR2.7bn (-8%) from life/health insurance. The combined ratio improved to 94.3% (96.2%), despite higher claims from weather-related losses. In 2013 net profit attributable to shareholders increased by 14.6% (EUR6bn).

RATING SENSITIVITIES

Key rating triggers that could lead to a downgrade include:

- Deterioration within the peripheral eurozone countries leading to a decline in respective bond and other asset prices

- A decline in Allianz's regulatory solvency ratio to below 160%

An upgrade is unlikely over the medium term, but upgrade triggers include:

- A sustained significant increase in the regulatory solvency ratio to above 200%

- A sustained strong improvement in profitability with a non-life combined ratio consistently below 95%

Allianz is one of the largest insurance groups in Europe. IFRS gross written premiums were EUR72.1bn and total assets stood at EUR712bn at end-2013. The group is active in both the non-life and life/health businesses as well as in asset management and has a strong business position and franchise.

List of rating actions:

Allianz SE: Long-term IDR affirmed at 'AA-'; Outlook Stable

Allianz SE: IFS rating affirmed at 'AA-'; Outlook Stable

Allianz core subsidiaries and their ratings:

Allianz Versicherungs-AG: IFS rating affirmed at 'AA'; Outlook Stable

Allianz Lebensversicherungs-AG: IFS rating affirmed at 'AA'; Outlook Stable

Allianz Private Krankenversicherungs-AG: IFS rating affirmed at 'AA'; Outlook Stable

Allianz Elementar Versicherungs-AG: IFS rating affirmed at 'AA'; Outlook Stable

Allianz Insurance Plc: IFS rating affirmed at 'AA'; Outlook Stable

Allianz Vie S.A.: IFS rating affirmed at 'AA'; Outlook Stable

Allianz IARD S.A.: IFS rating affirmed at 'AA'; Outlook Stable

Allianz Finance II B.V.

All outstanding senior notes affirmed at 'AA-'

All subordinated notes affirmed at 'A'

Allianz Finance's bonds are guaranteed by Allianz SE

Allianz SE

All outstanding senior notes affirmed at 'AA-'

All subordinated notes affirmed at 'A'