(The following statement was released by the rating agency)
LONDON/FRANKFURT, February 17 (Fitch) Fitch Ratings has affirmed
life insurer VOLKSWOHL BUND LEBENSVERSICHERUNG a.G.'s (VBL)
Strength (IFS) rating at 'AA-' with a Stable Outlook.
KEY RATING DRIVERS
The rating reflects VBL's strong capitalisation, its business
the independent financial advisor (IFA) and sales organisation
gross written premium (GWP) growth, and sound expense ratios.
drivers are its low level of diversification in terms of
Fitch expects VBL's consolidated shareholders' funds to have
increased to at
least EUR130m at end-2013 from EUR122.9m at end-2012 and its
funds for future
appropriation, including terminal bonus funds, to at least
Fitch expects available funds for life business to have
increased more than 5%.
However, VBL's actuarial reserves are likely to have increased
Measured as a proportion of actuarial reserves, VBL's available
therefore likely to have weakened slightly, decreasing to 8.1%
(end-2012: 8.3%). Fitch estimates this ratio for the German life
market as a
whole to have decreased to 7.3% at end-2013 from 7.7% at
end-2012. Despite this,
VBL's capitalisation is likely to have remained strong at
end-2013, on the basis
of Fitch's risk-adjusted assessment. Fitch expects the same for
group solvency ratio, which it estimates to have been more than
200% at end-2013
(end-2012: 218%), and that VBL will maintain it at a minimum of
VBL continued its strong growth in 2013, with annual GWP
increasing 3.9% (2012:
7.3%). However, its new business volume decreased 20% in 2013.
that the German life market's annual GWP increased 1% (2012:
1.0%). Fitch views
VBL's lower new business volume to be rating-neutral because it
ability to maintain its level of capitalisation.
Fitch expects VBL to report a net investment return rate of more
than 4.5% for
2013 (2012: 4.9%), and that it will be in line with, if not
higher than, the
German life market's average (2012: 4.6%). Fitch expects a
fairly stable return
rate for the market as insurers are likely to have continued
gains from fixed-income investments to finance the cost of
additional actuarial reserve (Zinszusatzreserve) in 2013. Fitch
Zinszusatzreserve costs for the market as a whole to have been
EUR6.5bn in 2013.
VBL continues to generate strong operating cash flow, which
risk. Expense and mortality profits have been consistently
strong. In 2012,
VBL's administration expense ratio was 2.0% and the acquisition
was 4.9%, which were better than the market averages of 2.4% and
respectively. Fitch expects VBL's expense ratios to continue to
market average in 2014.
VBL primarily serves sales organisations and IFAs. Geographical
is low as VBL operates only in Germany.
Fitch views an upgrade as unlikely in the near-to medium-term,
given VBL's high
current ratings and its lack of diversification. Key rating
drivers for a
downgrade include a deterioration in capital position with a
below 170%, weakened market position or a significant decline in
VBL is the holding company of the VOLKSWOHL BUND group (VBG). It
has the legal
form of a mutual and is VBG's most important operating entity,
with total assets
of EUR9.5bn, equating to 99% of the group's total at end-2012.
focuses on life insurance for private customers and small- and
enterprises in Germany. VBG generated GWP of EUR1.4bn in 2013.
Dr Christoph Schmitt
+49 69 768076 121
Fitch Deutschland GmbH
D-60325 Frankfurt am Main
Dr Stephan Kalb
+49 69 768076 118
+44 20 3530 1250
Media Relations: Hannah Huntly, London, Tel: +44 20 3530 1153,
Additional information is available on www.fitchratings.com.
Applicable criteria 'Insurance Rating Methodology', dated 13
November 2013, is
available at www.fitchratings.com.
Applicable Criteria and Related Research:
Insurance Rating Methodology -- Amended
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