Feb 26 - Fitch Ratings has affirmed German life
insurers R+V Lebensversicherung AG's (R+V Life) and R+V Lebensversicherung
a.G.'s (R+V Mutual) Insurer Financial Strength (IFS) ratings at 'AA-'. The
agency has simultaneously affirmed Condor Lebensversicherungs-AG's (Condor) IFS
rating at 'A+'. The Outlook is Stable.
KEY RATING DRIVERS
Based on its insurance rating methodology, Fitch views both R+V Life and R+V
Mutual as core to the R+V group, and the ratings are therefore aligned with the
agency's view of the R+V group as a whole. The agency views Condor as very
important to R+V which is supported by Condor's profit-and-loss sharing
agreement within the group. Condor benefits from a one-notch uplift from its
standalone credit profile.
The ratings are supported by the R+V group's solid capitalisation, good market
position, and the strong operating performance. Offsetting these positive rating
factors is the R+V Group's geographical focus on Germany.
One of the top 10 insurance groups in Germany, R+V is headed by R+V Versicherung
AG, which is 74%-owned by DZ Bank AG ('A+'/Stable). DZ Bank AG is the largest
central bank within Germany's cooperative banking sector Genossenschaftliche
FinanzGruppe (GFG; 'A+'/Stable). Fitch regards the ownership of R+V by DZ Bank
AG/GFG as positive, reflecting the agency's view that it would support the
insurance group, if necessary. This has been reflected in a one-notch uplift
from the agency's standalone assessment of the R+V group.
R+V Life, R+V Mutual and Condor reported strong regulatory solvency margins at
end-2011, well above the market average of 175%. Based on the regulatory ratios
and the agency's internal risk-based capital assessment, Fitch views the
companies' capitalisation as very strong. The agency expects that R+V Life, R+V
Mutual and Condor will have maintained their solid capital position at end-2012.
R+V Life, R+V Mutual and Condor reported a strong operating performance for
2011. Funds for future appropriation, lapse and expense ratios, and premium
growth were better than the market average in 2011. Fitch expects that the three
companies will have maintained a strong performance in 2012. The ratio of
investments in equities for R+V Life and R+V Mutual is higher than the German
market average while Condor's is in line with the average. Fitch does not view
the levels of the ratios as a particular concern, given the strong
As far as the primary insurance business is concerned, the R+V insurance group
is focussed on Germany. R+V Life is R+V's main operating life insurer in Germany
while Condor serves as a specialist for independent financial advisors in
individual life cover and R+V Mutual serves as a specialist for mid and high net
worth clients and pension funding. Measured by gross written premiums (GWP), R+V
Life was Germany's second-largest life insurer in 2011.
Key rating triggers for a downgrade include a downgrade of GFG/DZ Bank AG's
rating, a change in Fitch's view of R+V's strategic importance to GFG/DZ Bank
AG, a change in Fitch's view of the entities' core status within the R+V group,
or a significant weakening of the R+V group's standalone financial profile.
Key rating triggers for an upgrade include an upgrade of GFG/DZ Bank AG's
ratings, and the entities maintaining their strategic importance for R+V and
GFG/DZ Bank AG. For Condor an additional upgrade trigger is further progress in
Condor's integration within R+V which would lead to redefining Condor's
strategic status within R+V as core.
In 2011, R+V Life reported gross written premiums (GWP) of EUR4.5bn, R+V Mutual
EUR102m and Condor EUR233m. Fitch expects that 2012 GWP growth will have been
above-market-average for all three companies.