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Fitch Affirms Ohio National Seguros de Vida S.A.'s IFS at 'BBB'; Outlook Stable
November 2, 2017 / 8:34 PM / 17 days ago

Fitch Affirms Ohio National Seguros de Vida S.A.'s IFS at 'BBB'; Outlook Stable

(The following statement was released by the rating agency) CHICAGO, November 02 (Fitch) Fitch Ratings has affirmed Ohio National Seguros de Vida S.A.'s international scale Insurer Financial Strength (IFS) rating at 'BBB', and national scale IFS at 'AA(cl)', both with a Stable Outlook. The rating considers the company's adequate asset-liability and investment risk profile, strong growth and premium diversification. The rating also reflects the small size of the company and high leverage, which is expected to be mitigated in the short to medium term. KEY RATING DRIVERS Ohio has adequate liabilities coverage, considering the important role that annuities play in the company's written premium. The reinvestment risk as of June 2017, measured by the assets sufficiency test (TSA for its name in Spanish) was -2.46%, favorable compared to its historical average and to its peer group. The company has a stable and conservative investment portfolio. As of June 2017, 75.1% of the portfolio was composed of debt instruments issued locally with a weighted average risk of 'A+(cl)'. This is consistent with its historical level and is aligned with its peer group. Ohio exhibits a favorable trend toward product diversification with a written premium mix of disability and survival at 37.9%, annuities at 22.8%, credit life at 19.3% and traditional life insurance at 10.7%, and all others at 9.3% as of June 2017. Overall premium volume grew 28.1% over the last year and was due to a significant growth in disability and survival (263.2% in the last 12 months (LTM) ended June 2017, reaching a market share of 2.2% of total written premium. With the high level of asset administration business, the company's net result is dependent on financial income. During the LTM, investment results grew 12.2%, mainly because of higher asset volume. The operational ratio recovered, reaching 94.8%, but is still unfavorable relative to the peer group's average of 78.7%. Fitch considers Ohio's leverage as high, despite the fact that they are within the acceptable regulatory range. As of June 2017, the ratio of liabilities/equity reached 14.9x, which is at the upper end of the current risk category range as defined by Fitch Ohio's ultimate parent is Ohio National Life Insurance Company, a mid-sized U.S. mutual life insurer. Fitch views Ohio as being of limited importance to its ultimate parent and therefore assigns no rating uplift for ownership. RATING SENSITIVITIES The rating could be affected negatively by lack of progress in reducing leverage, an unfavorable change in the investment risk profile or significant deterioration in reinvestment risk and net results. A sustained strengthening in performance ratios, leverage and market share could have a positive impact on Ohio's rating. Contact: Primary Analyst Douglas Meyer Managing Director +1 312-368-2061 Fitch Ratings, Inc. 70 W. Madison St. Chicago, IL 60602 Secondary Analyst Carolina Alvarez Director +56 2 2499 3321 Committee Chairperson Julie A. Burke, CPA, CFA Managing Director +1 312 368-315 Media Relations: Benjamin Rippey, New York, Tel: +1 646 582 4588, Email: benjamin.rippey@fitchratings.com. Additional information is available on www.fitchratings.com Applicable Criteria Insurance Rating Methodology (pub. 26 Apr 2017) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here Solicitation Status here#solicitation Endorsement Policy 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 WEB SITE AT WWW.FITCHRATINGS.COM. 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