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TEXT-Fitch raises Irish Life Assurance IDR to 'BBB+'
November 27, 2012 / 4:40 PM / 5 years ago

TEXT-Fitch raises Irish Life Assurance IDR to 'BBB+'

Nov 27 - Fitch Ratings has upgraded Irish Life Assurance plc's (Irish Life)
Long-term Issuer Default Rating (IDR) to 'BBB+' from 'BBB' and the subordinated
debt rating to 'BBB-' from 'BB+'. Its Insurer Financial Strength (IFS) Rating
has been affirmed at 'BBB+'. The Outlooks on the IFS and IDR are Stable.

The rating actions reflect the revision of Ireland's Outlook to Stable from
Negative (see "Fitch Revises Outlook on Ireland to Stable; Affirms at 'BBB+'"
dated 14 November 2012 at www.fitchratings.com). The ratings continue to reflect
Irish Life's high exposure to Irish government and bank debt - although those
investments make up just 16% of the company's non-linked investments they amount
to 53% of Irish Life's shareholders' funds - and the importance of the Irish
economy to its business. Irish Life is rated based on its own standalone
profile, but the rating is limited by Irish sovereign and macroeconomic
constraints as 99% of its business is domestic.

Irish Life's ratings also reflect its strong standalone capitalisation
(regulatory solvency ratio of 184% at end-HY12), comparatively low-risk business
(over 90% of Irish Life's insurance liabilities are unit-linked, with investment
risk borne by policyholders) and strong market position (around 30% share of the
Irish life insurance market). However, in view of the weak operating environment
in Ireland, Fitch expects the company's earnings to remain under pressure for
several years.

Until June 2012, Irish Life was part of the permanent tsb Group (PTSB; formerly
Irish Life & Permanent Group). As a result of the recapitalisation of PTSB's
banking operations, which needed state support during the financial crisis,
Irish Life was sold to the Irish Minister for Finance for EUR1.3bn and is held
as a commercial business. Given the current macroeconomic environment in
Ireland, Fitch expects the Irish state to remain Irish Life's owner for the
foreseeable future, although Ireland plans to sell Irish Life as soon as
practicable.

A sale to a higher rated company could lead to an upgrade of Irish Life's
rating. Any change in Ireland's sovereign rating could also change Irish Life's
ratings.

The key rating triggers that could result in a downgrade include the
macro-economic environment having a greater than expected adverse impact on
policyholder surrender rates, new business or profitability. These threats could
include the impact of the Irish government's austerity package, high
unemployment, reduced consumer confidence and lower than expected GDP triggering
higher policyholder surrender rates and lower sales volumes.

Additional information is available at www.fitchratings.com. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been
compensated for the provision of the ratings.

Applicable criteria: 'Insurance Rating Methodology', dated 18 October 2012
available at www.fitchratings.com.

Applicable Criteria and Related Research:
Insurance Rating Methodology - Amended

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