LONDON--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength ratings (FSR) of A+ (Superior) and the issuer credit ratings (ICR) of “aa-” of Allianz Societas Europaea (Allianz SE) (Germany) and its subsidiaries. A.M. Best has also affirmed the ratings of all debt securities of Allianz SE. The outlook for all ratings remains stable. (See below for a detailed listing of the companies and ratings.)
The ratings reflect Allianz SE’s strong and supportive risk-adjusted capitalisation and consistently solid financial performance. Allianz SE is continuously de-risking its investment portfolio and limiting its exposure to peripheral European countries and financial institutions.
A generally conservative investment strategy concentrated in fixed income assets and good earnings retention contributes to a strong capital base. A continuing risk factor is the low interest rate environment. Although the record low interest rates on German bonds pose a challenge to Allianz SE’s life operations, A.M. Best believes that the group can continue to service investment guarantees on German life products, even if interest rates remain at their current level for the foreseeable future. To balance the portfolio over time, the group has introduced zero guarantee and hybrid products.
Due to its well diversified business profile and its market leading position in various segments, Allianz SE demonstrated resilience to catastrophes in Central Europe in 2013. Allianz SE’s Property and Casualty segment reported a combined ratio of 94.3% in 2013, two percentage points lower than in 2012, as the frequency of large losses was lower than in the prior year. The group also benefited from the improved performance of its asset management arm. Consequently, and in spite of generally low investment returns, Allianz SE reported a solid set of earnings in 2013 and in the first quarter of 2014. In 2013, profit-after-tax increased by 14% to EUR 6.3 billion. In the first quarter of 2014, Allianz SE posted an operating profit of EUR 2.7 billion and a net income of EUR 1.6 billion, slightly lower than the previous year as a result of lower performance fees from asset management. Looking ahead to year-end 2014, Allianz SE expects to achieve an operating profit between EUR 9.5-10.5 billion.
Allianz SE remains focused on underwriting discipline, reducing structural complexity and increasing synergies within the group as demonstrated by the creation of Allianz World Partners in 2013, which combines a number of Allianz SE’s companies and has the objective of providing a comprehensive service and product range.
Allianz SE maintains an excellent business profile and benefits from a very high degree of diversification, both in terms of businesses and markets. In 2013, with the acquisition of Yapi Kredi in Turkey, Allianz SE became the local market leader in property/casualty and a top three provider in life/health.
Upward rating actions are unlikely at this time. Downward ratings actions could occur if there is a worsening in Allianz SE’s risk-adjusted capitalisation, which could be the result of investment write-downs or a deterioration of economic conditions in key territories.
The FSRs of A+ (Superior) and the ICRs of “aa-” have been affirmed for the following subsidiaries of Allianz Societas Europaea:
- Allianz Lebensversicherungs-AG
- Allianz Versicherungs-AG
- Allianz Private Krankenversicherungs-AG
Concurrently, A.M. Best has withdrawn the above ratings since management has requested to no longer participate in A.M. Best’s interactive rating process.
The FSRs of A+ (Superior) and the ICRs of “aa-” have been affirmed for Allianz Societas Europaea and its following subsidiaries:
- Euler Hermes Deutschland-AG
- Allianz S.p.A
- Allianz Global Corporate & Specialty SE
The FSR has been upgraded to A+ (Superior) from A (Excellent) and the ICR to “aa-” from “a+” for Allianz Risk Transfer AG.
The following debt ratings have been affirmed:
Allianz Finance II B.V. (guaranteed by Allianz SE)—
- “aa-” on EUR 750 million 3% senior unsecured bonds, due 2028
- “aa-” on GBP 750 million 4.5% senior unsecured bonds, due 2043
- “aa-” EUR 500 million 1.375% senior unsecured bonds, due 2018
- “aa-” on EUR 1.5 billion 3.5% senior unsecured bonds, due 2022
- “aa-” on EUR 1.5 billion 4.75% senior unsecured bonds, due 2019
- “aa-” on EUR 1.5 billion 4.0% senior unsecured bonds, due 2016
- “a+” on EUR 1 billion 6.5% subordinated bonds, due 2025
- “a+” on EUR 2 billion 5.75% subordinated bonds, due 2041
- “a” on EUR 1.4 billion 4.375% perpetual subordinated bonds
- “a” on EUR 800 million 5.375% perpetual subordinated bonds
- “a+” on EUR 1.5 billion 5.625% subordinated bonds, due 2042
- “a” on USD 1 billion 5.5% perpetual subordinated bonds
- “a” on EUR 1.5 billion 4.75% perpetual subordinated bonds
-“a” on CHF 500 million 3.25% perpetual subordinated bonds
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.
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.
This rating announcement has been issued by A.M. Best Europe – Rating Services Limited, which is a subsidiary of A.M. Best Company. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.