Fitch Affirms Prevoir Vie & Prevoir Risques Divers at IFS 'A'; Outlook Stable

Wed May 28, 2014 11:22am EDT

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(The following statement was released by the rating agency) PARIS/LONDON, May 28 (Fitch) Fitch Ratings has affirmed France-based Prevoir Vie's and Prevoir Risques Divers' Insurer Financial Strength (IFS) ratings at 'A'. The agency has also affirmed Societe Centrale Prevoir's (the group's holding company) Long-term Issuer Default Rating (IDR) at 'A-'. The Outlooks are Stable. KEY RATING DRIVERS The ratings of all three entities (together referred to as 'the group') reflect their solid capital adequacy, resilient earnings generation and the conservative strategy pursued by their management. Offsetting factors include their limited size, the current lack of geographical diversification, and a fairly high exposure to equities and real estate investments. Their modest scale and lack of geographical diversification leave the group exposed to potential industry-wide changes in the French insurance sector. Fitch believes that Prevoir Vie's and Prevoir Risques Divers' capital adequacy will continue to be solid, significantly in excess of regulatory requirements. At end-2013, the capital base of Prevoir Vie and Prevoir Risques Divers covered the minimum regulatory requirement by 5.2x and 15.9x respectively when including unrealised gains, and by 1.3x and 9.3x when excluding unrealised gains. The group has not issued any financial debt and it has no intention of raising any in the foreseeable future. Fitch expects Prevoir Vie and Prevoir Risques Divers to continue to generate strong earnings. At end-2013, net income reached EUR46m (2012: EUR42m), mainly driven by strong income from insurance activities (2013: EUR26.4m, 2012: EUR26.7m) and supplemented by investment and other income (2013: EUR21.3m, 2012: EUR16.6m). Despite premium growth in excess of the French life market, the group's scale remains modest. Consolidated gross written premiums (GWP) increased 10% in 2013 to EUR514m. The group outperformed the French insurance market, where life premiums decreased by 9%. Growth was predominantly driven by single premium savings products and Prevoir Partenaire, the group's white label insurance offer, which reported a 104% increase in GWP to EUR32m, driven by the addition of new partnerships in 2013. Fitch expects the group to continue to pursue a conservative approach to avoid significant business risks and to finance growth with its own capital. Although the proportion of investments allocated to high-risk assets (equities and real estate) is fairly high, the group maintains a significant capital buffer against potential market risks. The IDR for Prevoir is one notch higher than it would be under Fitch's standard notching methodology. This reflects the holding company's lack of financial debt and its direct holdings of significant financial assets (including cash) in addition to its ownership of the two insurance operating companies. RATING SENSITIVITIES Key triggers for a downgrade would include a prolonged period of poor financial performance with, for example, reported net income remaining below EUR20m or a significant decline in Prevoir Vie's Solvency I ratio including unrealised gains to below 3.0x (end-2013: 5.2x) . Fitch would also view negatively any unexpected significant change in the group's financial strategy and conservative management style, as well as any material change in the dividend policy. A rating upgrade is unlikely in the medium term given the concentration of its operations on the French market. However, over the longer term, material growth in market share along with strong financial performance and solid capital adequacy could result in an upgrade of the group's ratings. Contact: Primary Analyst Anna Bender Associate Director +44 20 3530 1671 Fitch Ratings Limited 30 North Colonnade London E14 5GN Secondary Analyst Marc-Philippe Juilliard Senior Director +33 1 4429 91 37 Committee Chairperson Harish Gohil Managing Director +44 20 3530 1257 Media Relations: Francoise Alos, Paris, Tel: +33 1 44 29 91 22, Email: francoise.alos@fitchratings.com; Hannah Huntly, London, Tel: +44 20 3530 1153, Email: hannah.huntly@fitchratings.com. Additional information is available at www.fitchratings.com. Applicable criteria, 'Insurance Rating Methodology', dated 13 November 2013 are available at www.fitchratings.com. Applicable Criteria and Related Research: Insurance Rating Methodology here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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