LONDON--(BUSINESS WIRE)--As a result of the continued negative developments regarding the eurozone sovereign debt crisis, A.M. Best Europe – Rating Services Limited is taking rating actions on a number of European (re)insurers. Amongst them, A.M. Best has downgraded the issuer credit ratings (ICR) to “aa-” from “aa” and affirmed the financial strength rating (FSR) of A+ (Superior) of Allianz Societas Europaea (Allianz SE) (Germany) and its main subsidiaries. All ratings have been placed under review with negative implications. (See below for a complete listing of companies and debt instruments.)
These rating actions were driven by Allianz SE’s exposure to investments in several peripheral eurozone economies, Italy in particular, as well as its investment exposures to eurozone banks.
A.M. Best’s rating actions on Allianz SE and other European (re)insurers reflect their exposure to the continued deterioration of the sovereign creditworthiness of several eurozone countries and the negative economic outlook for the region. A.M. Best has been actively monitoring this crisis and released reports on related (re)insurers’ exposure in September and November of this year. The rationale for taking rating action at this point is largely attributable to the current level of credit and liquidity risk for insurers operating within the eurozone countries—most notably Italy and Spain. The perceived strain on the economies of these countries and companies operating within their borders is growing rapidly with very little evidence of a solution being formulated to address near-term concerns.
The ratings for Allianz SE will remain under review with negative implications while A.M. Best examines these companies’ exposure to a prolonged adverse economic environment within the eurozone. Of particular concern to A.M. Best is the exposure to Italy and Spain’s sovereign bonds and the potential for contagion into other asset classes, particularly holdings of European bank securities. In addition, A.M. Best will assess the likely impact of a prolonged financial crisis and recessionary environment on these carriers’ market position and ongoing business operations.
Upward rating pressures are unlikely at this point.
Negative rating actions could occur if there were a worsening of risk-adjusted capitalisation tied to investment losses or a deterioration of the operating environment in key territories.
The ICRs have been downgraded to “aa-” from “aa” and the FSR of A+ (Superior) has been affirmed for Allianz Societas Europaea and its following subsidiaries:
- Allianz Lebensversicherungs-AG
- Allianz Versicherungs-AG
- Allianz Private Krankenversicherungs-AG
- Euler Hermes Kreditversicherungs-AG
- Allianz S.p.A
- Allianz Insurance plc
- Allianz Vie
- Allianz IARD
- Allianz Global Corporate and Specialty AG
- Allianz Global Corporate & Specialty (France) S.A.
The ICR has been downgraded to “a-” from “a” for Allianz France S.A.
The FSR of A (Excellent) and the ICR of “a+” have been affirmed for AGA International S.A.
The ICR has been downgraded to “a” from “a+” and the FSR of A (Excellent) has been affirmed for Allianz Risk Transfer AG.
The following debt ratings have been downgraded:
Allianz Finance II B.V. (guaranteed by Allianz SE)—
--
to “aa-” from “aa” on EUR 0.9 billion 5.625% senior unsecured bonds, due
2012
-- to “a+” from “aa-”on EUR 2 billion 5.75% subordinated
bonds, due 2041
-- to “aa-” from “aa” on EUR 1.5 billion 4.75%
senior unsecured bonds, due 2019
-- to “aa-” from “aa” on EUR 1.5
billion 4.0% senior unsecured bonds, due 2016
-- to “aa-” from “aa”
on EUR 1.5 billion 5.0% senior unsecured bonds, due 2013
-- to “a+”
from “aa-”on EUR 2 billion 6.125% senior subordinated bonds, due 2022
--
to “a+” from “aa-”on EUR 1 billion 6.5% senior subordinated bonds, due
2025
-- to “a+” from “aa-”on EUR 1.4 billion 4.375% undated junior
subordinated bonds
-- to “a+” from “aa-” on EUR .800 billion 5.375%
undated subordinated bonds
-- to “a+” from “aa-”on USD .500 billion
7.25% perpetual subordinated bonds
Allianz SE—
-- to “a+” from “aa-”on USD 2 billion 8.375%
undated subordinated bonds
-- to “a+” from “aa-”on EUR 1.5 billion
5.5% perpetual junior subordinated bonds
Allianz France S.A.—
-- to “bbb+” from “a-” on EUR .400
billion 4.625% junior subordinated notes
The principal methodology used in determining these ratings is Best’s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilised include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding Universal BCAR”; “Understanding BCAR for Property/Casualty Insurers”; “Rating Members of Insurance Groups”; “Natural Catastrophe Stress Test Methodology”; and “A.M. Best’s Ratings & the Treatment of Debt”. Methodologies can be found at www.ambest.com/ratings/methodology.
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.
A.M. Best Europe – Rating Services Limited is a subsidiary of A.M. Best Company. Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
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