A.M. Best Affirms Ratings of Allianz SE and Most of Its Subsidiaries
August 11, 2015 by AM Best
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FOR IMMEDIATE RELEASE LONDON – AUGUST 06, 2015 The ratings reflect Allianz’s excellent risk-adjusted capitalisation, strong operating performance, diversified business profile and robust risk management framework. The group’s risk-adjusted capitalisation (as measured by Best’s Capital Adequacy Ratio) improved in 2014 as a result of fair value gains, substantial retained earnings and controlled business growth. In the same year, the group’s capital and surplus increased by 21% to EUR 60.7 billion. Although exposure to market risk subjects the group’s risk-adjusted capitalisation to potential volatility, it is expected to remain at a strong level and supportive of its ratings for the foreseeable future. Allianz has demonstrated a record of strong underwriting and overall profitability throughout a long period. In recent years, along with the robust performance of its core operating units, the group’s vast size and highly diversified insurance portfolio has enabled it to comfortably absorb losses associated with any underperforming businesses. In 2014, Allianz reported a return on equity (including minority interest) of 11.3% and a combined ratio for its property/casualty (P/C) business of 95%, despite significant challenges at Pacific Investment Management Company LLC (PIMCO) – an asset manager, and Fireman’s Fund – a P/C underwriter, which are both substantial companies. Allianz is a leading global insurer with a strong competitive position in numerous mature insurance markets. In 2014, the group reported total revenues of EUR 112 billion. Although a significant proportion of Allianz’s revenue is concentrated in Western Europe, no single market is critical for its overall earnings. The group offers a full range of insurance products to both retail and corporate customers and has good diversification between its life and non-life operations. The upgrading of the ratings of FFIC is based on a change in ownership whereby Fireman’s Fund became a wholly-owned subsidiary of Allianz Global Risks US Insurance Company (AGR US). Further, Fireman’s Fund has been fully integrated into the AGR US operating platform and additional reinsurance protection and other explicit support has been put into place. The upgrading of the ratings of Allianz Life reflect its core position within the consolidated life group of its ultimate parent (Allianz), its leading U.S. market position within the fixed index annuity market (FIA), solid risk-based capital position, favourable premium and IFRS operating trends and its overall contribution to Allianz. The ratings also recognize Allianz Life’s innovation in product design, well developed enterprise risk management framework and its modest operating leverage. These rating factors are partially offset by Allianz Life’s narrow business profile given its concentration within indexed product lines (primarily FIA and variable annuities) along with increased levels of competition within the FIA marketplace. While IFRS operating results continue to improve, interest rate and equity market sensitivity remain high with continued pressure on investment spread margins given the ongoing low interest rate environment. Additionally, statutory results remain somewhat volatile with continued poor operating performance in Allianz’s legacy variable annuity block. The FSR of A+ (Superior) and the ICR of “aa-” have been affirmed for Allianz SE and its following subsidiaries:
The FSR has been upgraded to A+ (Superior) from A (Excellent) and the ICR has been upgraded to “aa-” from “a” for Fireman’s Fund Insurance Company and its following affiliates:
The FSR has been upgraded to A+ (Superior) from A (Excellent) and the ICR has been upgraded to “aa-” from “a+” for Allianz Life Insurance Company of North America and its affiliate, Allianz Life Insurance Company of New York. The following issue ratings have been affirmed: Allianz Finance II B.V. (debt issues are guaranteed by Allianz)– — “aa-” on EUR 750 million 3% senior unsecured bonds, due 2028 — “aa-” on GBP 750 million 4.5% senior unsecured bonds, due 2043 — “aa-” on 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 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 Allianz SE– — “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 — “a” on EUR 1.5 billion 3.375% perpetual junior subordinated bonds 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 press release relates to rating(s) that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best’s Ratings & Criteria Center. A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. A.M. Best’s credit ratings are independent and objective opinions, not statements of fact. A.M. Best is not an Investment Advisor, does not offer investment advice of any kind, nor does the company or its Ratings Analysts offer any form of structuring or financial advice. A.M. Best’s credit opinions are not recommendations to buy, sell or hold securities, or to make any other investment decisions. A.M. Best receives compensation for interactive rating services provided to organizations that it rates. A.M. Best may also receive compensation from rated entities for non-rating related services or products offered by A.M. Best. A.M. Best does not offer consulting or advisory services. A.M. Best – European Rating Services Limited (AMBERS), a subsidiary of A.M. Best Company, is an External Credit Assessment Institutions (ECAI) in the European Union (EU). Therefore, credit ratings issued by AMBERS may be used for regulatory purposes in the EU as per Directive 2006/48/EC. |
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