Fitch Ratings has taken various conforming rating actions on
Key Rating Drivers
The
All rating actions announced in this RAC are directly driven by separately announced rating actions on associated enhancement providers, liquidity providers or underlying bonds. The most recent RAC with respect to the credit rating of each associated enhancement provider, liquidity provider or underlying bonds referenced herein sets out the key rating drivers and names and contact details of the relevant primary and secondary analysts and committee chair in relation to the credit ratings of such enhancement providers, liquidity providers or underlying bonds.
The specific pre-existing rating dependency relationship for a given
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive rating action/upgrade
A positive rating action on the associated enhancement providers, liquidity providers or underlying bonds, taking into account the specificities of the existing rating dependencies;
A restructuring of the enhancement existing arrangements (e.g. a change to a higher rated enhancement provider), in which case the affected rating dependency relationship will be reviewed and the ratings may be positively affected.
Factors that could, individually or collectively, lead to negative rating action/downgrade
A negative rating action on the associated enhancement providers, liquidity providers or underlying bonds, taking into account the specificities of the existing rating dependencies;
A restructuring of the enhancement existing arrangements (e.g. the expiry of the enhancement), in which case the affected rating dependency relationship will be reviewed and the ratings may be negatively affected or withdrawn.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
VIEW ADDITIONAL RATING DETAILS
Additional information is available on www.fitchratings.com
PARTICIPATION STATUS
18
Fitch Affirms
Tue
Fitch Ratings -
The affirmation reflects
Key Rating Drivers
Very Strong Company Profile:
Very Strong Capitalisation: Solvency 2 (S2) ratio was very strong at 267% at end-1Q24 (end-2023: 269%, end-2022: 252%), which is significantly above the group's 200% minimum target and at the higher-end of its large European reinsurers peer group's. Strong operating capital generation has enabled the group to finance risk exposure growth and increase capital returns to shareholders in 2023. Its Prism Global model (Prism) score was 'Extremely Strong' at end-2023 (little changed from end-2022 under IFRS17 and versus 'Very Strong' under IFRS4). Fitch expects
Moderate Financial Leverage:
Stable Earnings Profile:
Very Strong Financial Performance: Fitch-calculated return on equity (ROE) rose to 19% in 2023 (2022: 9%), driven by improved underwriting and investment results on the back of favourable market conditions. Reported net P&C combined ratio (CR) improved slightly to 94.0% (2022: 94.5%), supported by stronger pricing and smaller, below-budget large losses.
L&H reinsurance margins have strengthened significantly, driven by substantial contractual service margin (CSM) release (representing 16% of opening CSM) on lower mortality claims and rate increases. Fitch anticipates that based on its very strong 1Q24 earnings and assuming within-budget large losses and stable capital markets, the group will deliver similar or better profitability in 2024 than in the previous year. We expect strong pricing, positive run-offs and rising investment income to be supportive of 2024 earnings.
Strong Reserve Adequacy: Fitch views
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
An improvement in Fitch's assessment of company profile driven by a further strengthening of competitive position. The following conditions would have to be met on a sustained basis:
ROE above 10%
S2 ratio above 200%
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
A deterioration in capital position, with the S2 ratio falling below 170% or a Prism score falling to below 'Very Strong' for a prolonged period
A sustained decline in ROE to below 7%
FLR above 28%
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Click here to access Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in our credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included.
ESG Considerations
The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores.
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