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Fitch Downgrades ACE Russia to 'BBB'
August 4, 2014 / 11:47 AM / 3 years ago

Fitch Downgrades ACE Russia to 'BBB'

(The following statement was released by the rating agency) LONDON, August 04 (Fitch) Fitch Ratings has downgraded ACE Insurance Company CJSC (Russia)'s (ACE Russia) Insurer Financial Strength (IFS) rating to 'BBB' from 'BBB+'. The Outlook is Negative. Fitch has also affirmed ACE Russia's National IFS rating at 'AAA(rus)' with Stable Outlook. KEY RATING DRIVERS The downgrade of ACE Russia's IFS follows the downgrade of the Russian Federation's (Russia) Country Ceiling to 'BBB' from 'BBB+'. This in turn reflects Fitch's view that, although the Russian authorities continue to maintain an open capital account, sanctions from and deteriorating relations with the EU and US pose risks to Russia's financial integration with the rest of the world, increasing transfer and convertibility risk. ACE Russia is part of ACE Group, a global insurer and reinsurer. The ultimate parent of the group is ACE Limited, domiciled in Switzerland (Long-Term IDR AA-/Stable). Fitch continues to view ACE Russia's as "Important" to the ACE Group under its approach to rating insurance groups. This reflects the deep integration of operations, shared brand name, track record of support and aligned corporate governance and risk management procedures. The inclusion of a significant portion of local risks in ACE Russia's portfolio from multinational companies that are also ACE Group's worldwide clients supports this view. However, the company's small size relative to the group precludes the strategic importance from being assessed as "Very Important", and support from the parent is informal rather than provided through a formal support agreement. ACE Russia's rating therefore reflects partial attribution of ACE Group's strength. On a standalone basis, ACE Russia would be rated more than six notches below its ultimate parent. The Negative Outlook on ACE Russia's IFS mirrors the Negative Outlook on Russia's 'BBB' Long-term local currency IDR. RATING SENSITIVITIES A downgrade of Russia's Long-term local currency IDR is likely to lead to a corresponding downgrade of ACE Russia's IFS rating. Conversely, revision of the Outlook on Russia's Long-term local currency IDR to Stable could trigger a similar rating action on ACE Russia. If a formal support agreement were to be introduced between ACE Limited and ACE Russia, ACE Russia's ratings could be upgraded. Conversely, Fitch would view any decline in the level of parent support to the insurer as a trigger for a downgrade. If ACE Russia maintains sustainable and profitable growth and achieves a more material scale relative to ACE Group, the IFS rating could be upgraded. However, Fitch does not expect this in the near or medium term. Contact: Primary Analyst Anastasia Litvinova Director +7 495 956 7082 Fitch Ratings CIS Limited Valovaya Street, 26 Moscow 115054 Secondary Analyst Federico Faccio Senior Director +44 20 3530 1394 Committee Chairperson Clara Hughes Senior Director +44 20 3530 1249 Media Relations: Elaine Bailey, London, Tel: +44 203 530 1153, Email: elaine.bailey@fitchratings.com; Julia Belskaya von Tell, Moscow, Tel: +7 495 956 9908, Email: julia.belskayavontell@fitchratings.com. Additional information is available on 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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