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Fitch Upgrades Irish Life Assurance plc's IFS Rating to 'A+'; Outlook Stable
August 19, 2014 / 2:46 PM / 3 years ago

Fitch Upgrades Irish Life Assurance plc's IFS Rating to 'A+'; Outlook Stable

(The following statement was released by the rating agency) LONDON, August 19 (Fitch) Fitch Ratings has upgraded Irish Life Assurance plc's (Irish Life) Insurer Financial Strength (IFS) rating to 'A+' from 'A', Long-term Issuer Default Rating (IDR) to 'A' from 'A-'and subordinated debt to 'BBB+' from 'BBB'. The Outlooks on the Long-term IDR and IFS ratings are Stable. KEY RATING DRIVERS The upgrade follows the upgrade of Ireland's Long-term foreign and local currency Issuer Default Ratings (IDR) to 'A-' from 'BBB+' (see 'Fitch Upgrades Ireland to 'A-'; Outlook Stable', dated 15 August 2014 at www.fitchratings.com) and reflects the importance of the Irish economy to Irish Life as 99% of its business is domestic. Prior to the sovereign upgrade, Ireland's ratings constrained Irish Life's ratings, which would otherwise have been one notch higher. The ratings also reflect Irish Life's strong standalone capitalisation (regulatory solvency of 193% at end-1Q14), comparatively low-risk business (the majority of Irish Life's insurance net liabilities are unit-linked, with investment risk borne by policyholders) and strong market position, although in view of the weak operating environment in Ireland, Fitch expects the company's earnings to remain under pressure for several years. Fitch considers Irish Life to be 'important' to its ultimate parent, Great-West Lifeco, Inc. (IDR: A+/Stable), under the agency's insurance group rating methodology, in view of the earnings contribution and business diversification it provides to the group. Irish Life benefits from a one-notch uplift from its standalone assessment as a result of its ownership. Fitch views Irish Life's strategic importance as 'important' rather than 'very important' or 'core' because of its relatively small size compared with the group as a whole, its different branding and its newness to the group. Irish Life's 'A+' IFS rating is two notches higher than Ireland's sovereign Long-term IDR. One notch reflects the strength of its balance sheet, with a significant proportion of its shareholder asset exposure being to non-Irish assets. The second notch reflects its ownership by Great-West Lifeco. The Stable Outlook reflects Fitch's belief that Irish Life's standalone profile will not improve to the 'A+' level in the medium term, particularly given its position as a medium-sized domestic Irish life insurer. RATING SENSITIVITIES An increase or decrease in Irish Life's strategic importance, in Fitch's opinion, to Great-West Lifeco could lead to an upgrade or downgrade, respectively. The ratings could also be downgraded if the macro-economic environment has a greater than expected adverse effect on Irish Life's policyholder surrender rates, new business or profitability. Macro-economic threats could come from the Irish government's austerity package, high unemployment, reduced consumer confidence and lower than expected GDP, which might trigger higher policyholder surrender rates and lower sales volumes. Contact: Primary Analyst Ralf Ehrhardt Associate Director +44 20 3530 1551 Fitch Ratings Limited 30 North Colonnade London E14 5GN Secondary Analyst David Prowse Senior Director +44 20 3530 1250 Committee Chairperson Federico Faccio Senior Director +44 20 3530 1394 Media Relations: Elaine Bailey, London, Tel: +44 203 530 1153, Email: elaine.bailey@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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