OREANDA-NEWS. Fitch Ratings has affirmed the Insurer Financial Strength (IFS) ratings of South Africa-based RMB Structured Insurance Limited (RMBSI), Ireland-based RMB Financial Services Limited (RMBFS) and Mauritius-based RMB Structured Insurance Limited PCC (RMBSI PCC) at 'BBB-'. Fitch has simultaneously upgraded RMBSI's National IFS rating to 'AA-(zaf)' from 'A+(zaf)'. The Outlooks are Stable.

The rating actions follow the downgrade of South Africa's Long-Term Local Currency (LTLC) Issuer Default Rating (IDR) to 'BBB-' from 'BBB' (see 'Fitch Applies Criteria Changes to Global Sovereign Ratings' dated 22 July 2016 on www. fitchratings. com).

KEY RATING DRIVERS

Fitch has affirmed the RMBSI group's international scale IFS ratings despite the downgrade of South Africa's LTLC IDR. This action follows the application of Fitch's revised Sovereign Criteria to the notching relationship between sovereign LTLC and Long-Term Foreign Currency IDRs. The affirmation considers that the downgrade of South Africa's LTLC IDR does not signal a further weakening in operating conditions for South African insurers.

RMBSI's National Ratings have been upgraded to retain the insurer's relative position on the South African National Ratings scale, following Fitch's recalibration of the scale in light of the LTLC rating action. On the new scale, RMBSI's implied LTLC IDR of 'BB+' maps to an implied National Long-Term rating of 'A+(zaf)', resulting in a National scale IFS one notch higher.

The ratings reflect the companies' strong capital positions, as well as the RMBSI group's resilient fee and underwriting income, prudent investment policy and conservative approach to underwriting risk. These positive rating drivers are offset by the group's small size (particularly in relation to other insurers in the market) and concentration risk, stemming from its focus on the South African market and its limited number of clients.

RMBSI PCC's and RMBFS's ratings reflect the companies' strong links to the RMBSI group. We view RMBSI PCC and RMBFS as "Core" to the RMBSI group, as defined in our insurance rating methodology, and therefore align their IFS ratings with RMBSI.

RATING SENSITIVITIES

A downgrade of South Africa's Long-Term Foreign or Local Currency IDRs would trigger a similar rating action on RMBSI's IFS ratings. However, a one-notch upgrade of South Africa's IDRs is unlikely to lead to a corresponding action on RMBSI's IFS ratings.

RMBSI group's South African National Scale ratings could be upgraded if there is sustained profitable growth that improves the overall scale and creditworthiness of the group relative to other South African issuers, provided the strong capital position is maintained.

A downgrade of both the National and International scale ratings could result from a sharp decline in revenue or earnings or a sustained sharp deterioration in capitalisation, as measured by regulatory solvency or Fitch's Prism Factor-Based Model.