(Repeat for additional subscribers)
June 30 (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
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
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
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.
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.