A.M. Best has commented that the financial strength rating of A- (Excellent) and the issuer credit rating of “a-” of Axeria Prévoyance (AxP) (France) and Axeria Re Limited (Axeria Re) (Malta) remain unchanged following the announcement of the deterioration of their ultimate parent, April S.A.’s (April) group results during the second half of 2014.
April expects 2014 pro forma sales to decline by 1% to 2%, impacted by the group’s strategic decision to restrict new business in individual health insurance since 2013 in order to prepare for the health care legislation “ANI”, which requires that salaried workers be covered under a group complementary health insurance by 1 January 2016. In the meantime, the group announced a decline in its 2014 expected earnings before interest and taxes by 18% to 21%, chiefly driven by increased costs linked to the restructuring of the group’s operations.
AxP and Axeria Re benefit from the strong market position of April, and their rating fundamentals are expected to remain solid, with risk-adjusted capitalisation and performance supportive of their current level of ratings.
The coming two years will represent a significant test to April’s business model, as the group reshapes its international operations whilst restructuring to embrace the opportunities stemming from the ANI and Hamon legislations. The latter is expected to enable greater flexibility for policyholders to switch their loan insurance. A.M. Best will closely monitor the way April manages this transition, together with its impact on AxP and Axeria Re, and the financial positions of the group and its rated subsidiaries.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Key insurance criteria reports utilised:
• Catastrophe Analysis in A.M. Best Ratings
• Equity Credit for Hybrid Securities
• Rating Members of Insurance Groups
• Risk Management and the Rating Process for Insurance Companies
• Understanding Universal BCAR
In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.
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