RPT-Fitch Revises Guardrisk International PCC's Outlook to Negative; Affirms Guardrisk's IFS Ratings

Mon Jun 30, 2014 5:43am EDT

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June 30 (Reuters) - (The following statement was released by the rating agency)

Fitch Ratings has revised Mauritius-based Guardrisk International Limited PCC's (GIL) Outlook to Negative from Stable, while affirming its Insurer Financial Strength (IFS) rating at 'BBB'.

The revision of GIL's Outlook to Negative follows the revision of South Africa's sovereign ratings Outlook to Negative from Stable (see "Fitch Revises South Africa's Outlook to Negative; Affirms at 'BBB' ", dated 13 June 2014 at www.fitchratings.com).

Fitch has also affirmed Guardrisk Insurance Company Limited's (Guardrisk Insurance) and Guardrisk Life Limited's (Guardrisk Life) 'AA(zaf)' National Insurer Financial Strength (IFS) ratings. Both Outlooks are Stable, reflecting Fitch's expectation that the Guardrisk group's national ratings relative to the best credit in the country will remain stable.

Fitch views Guardrisk Insurance, Guardrisk Life and GIL (together referred to as Guardrisk) as "core" to the Guardrisk group, as defined in the agency's insurance rating methodology.

KEY RATING DRIVERS

The revision of the Outlooks to Negative reflects the Guardrisk group's concentration in South Africa and a weakening operating environment as indicated by the Negative Outlook on the sovereign rating. Around 95% of the Guardrisk group net revenues come from South Africa, with the remainder from Mauritius and Gibraltar.

Fitch views MMI group's (National IFS AA+(zaf)/Stable) ownership as positive for Guardrisk. However, given the recent conclusion of the acquisition, Guardrisk continues to be rated on a standalone basis, and does not receive any rating uplift from being a member of the MMI group. The linkages will be reviewed as potential benefits from being part of the MMI group crystalise.

Fitch considers Guardrisk as strategically "important" to the MMI group, as defined under Fitch's insurance rating methodology.

RATING SENSITIVITIES

A downgrade of South Africa's Long-term foreign or local currency Issuer Default Ratings could trigger a downgrade of GIL's IFS rating. A downgrade in the sovereign ratings is not expected to affect the National IFS ratings of Guardrisk Insurance and Guardrisk Life, as the relativity of these ratings to that of the best credits in South African should remain unaffected.

The rating may be aligned to the rating of MMI group following the successful integration of Guardrisk, and an increase in Guardrisk's strategic importance to the MMI group, as defined under Fitch's insurance rating methodology.

A downgrade may result from a downgrade of the MMI group by more than one notch, or a significant deterioration in the standalone profile of Guardrisk.

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