April 20, 2017 / 3:41 PM / 2 years ago

Fitch Assigns R+V Allgemeine Versicherung AG 'AA' IFS Rating

(The following statement was released by the rating agency) LONDON/FRANKFURT, April 20 (Fitch) Fitch Ratings has assigned German non-life insurer R+V Allgemeine Versicherung AG (R+V Non-Life) an Insurer Financial Strength (IFS) rating of 'AA' with a Stable Outlook. Fitch has also affirmed R+V Lebensversicherung AG's (R+V Life), R+V Lebensversicherung a.G.'s (R+V Mutual) and Condor Lebensversicherungs-Aktiengesellschaft's (Condor) IFS ratings at 'AA'. The Outlook on all ratings is Stable. KEY RATING DRIVERS Fitch views R+V Non-Life, R+V Life, R+V Mutual and Condor as 'core' to the R+V insurance group and the ratings are therefore aligned with the agency's view of the R+V group as a whole, in line with our insurance group rating methodology. The R+V group's holding company is R+V Versicherung AG, which is 92%-owned by DZ Bank AG (Issuer Default Rating AA-/Stable). DZ Bank AG is the central bank within Germany's cooperative bank assurance group Genossenschaftliche FinanzGruppe (GFG; AA-/Stable). Fitch takes a positive view of the ownership of the R+V group by DZ Bank AG/GFG in that the bank would support the insurance group, if necessary. This has been reflected in a two-notch rating uplift from the agency's standalone assessment for the R+V group's implied Issuer Default Rating. The ratings are supported by the R+V group's strong capitalisation, market position and operating performance. Offsetting these positive rating factors is the R+V group's significant duration gap in the German life business and a geographical focus on Germany. Fitch assesses the group's capitalisation as 'very strong', which we expect to have been maintained in 2016. Under Fitch's Prism Factor Based Model (Prism FBM), the R+V group scored 'very strong' based on end-2015 and our forecasted end-2016 financials. This was supported by the group's regulatory solvency I margin of 185% at end-2015. We expect the R+V group to report a ratio higher than 170% under Solvency II for end-2016. The R+V group is one of the top five primary insurance groups in Germany holding the third position in both, the life and the non-life segment while its position in health is lower. Measured by gross written premiums (GWP) in 2015, R+V Life is Germany's second-largest life insurer and R+V Non-Life the country's fifth-largest non-life insurer. The R+V group has consistently increased its market share in recent years. For 2016 Fitch expects the R+V group to have maintained the strong operating performance it reported in 2015. However, we expect the R+V group's non-life segment to report a net combined ratio close to 100% (2015: 101.3%) for 2016, which would be weaker than our expectation for the German market of 95% (2015: 94.8%). Fitch assesses the R+V group's asset/liability and liquidity management at 'bbb' (ALM score). Compared with the group's rating, the weak ALM score is primarily driven by the R+V group's large duration mismatch for the German life business. Fitch believes that the R+V group's asset duration is below the average duration of German life insurers. R+V Non-Life and R+V Life are the R+V group's main operating non-life and life insurers respectively. Condor serves as a specialist for independent financial advisors in individual life and R+V Mutual is a life specialist for mid- and high-net worth clients and a pension provider. RATING SENSITIVITIES Key rating triggers for a downgrade include a downgrade of GFG/DZ Bank AG's ratings, a change in Fitch's view of the R+V group's strategic importance to GFG/DZ Bank AG or a change in Fitch's view of the entities' core status within the R+V group. Key rating triggers for an upgrade include an upgrade of GFG/DZ Bank AG's ratings, and the entities maintaining their strategic importance for the R+V group and GFG/DZ Bank AG. Contact: Primary Analyst Dr Christoph Schmitt Director +49 69 768076 121 Fitch Deutschland GmbH Neue Mainzer Strasse 46-50 60311 Frankfurt am Main, Germany Secondary Analyst Dr Stephan Kalb Senior Director +49 69 768076 118 Committee Chairperson Willem Loots Senior Director +44 20 3530 1808 Media Relations: Athos Larkou, London, Tel: +44 203 530 1549, Email: athos.larkou@fitchratings.com. Additional information is available on www.fitchratings.com Applicable Criteria Insurance Rating Methodology (pub. 15 Sep 2016) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here Solicitation Status here Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. 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