OREANDA-NEWS. Fitch Ratings has assigned Danish travel insurer Europaeiske Rejseforsikring A/S (ERV Denmark) and Swedish travel insurer ERV Foersaekringsaktiebolag (publ) (ERV Sweden) Insurer Financial Strength (IFS) ratings of 'A' with Stable Outlooks.

KEY RATING DRIVERS
The companies' ratings reflect their ultimate 100%-ownership by Munich Re (IFS: AA-), strategic importance to Munich Re's travel insurance operations and strong capitalisation, which is offset by their small size. ERV Denmark and Sweden are classified as 'very important' to Munich Re under Fitch's insurance rating methodology and the ratings benefit from a two-notch uplift from their standalone credit profiles.

The companies are 100%-owned by the German ERV Europaeische Reiseversicherung AG (ERV, IFS: AA-) which heads Munich Re's travel insurance operations and is 100%-owned by ERGO Versicherungsgruppe AG (Issuer Default Rating: A+). ERV has a long history within the Munich Re group.

The two companies represent Munich Re's travel insurance operations in the Nordics and support ERV's market leading position in Europe.

ERV Denmark and ERV Sweden hold top market positions in travel insurance in their home countries. The companies have strong capitalisation with the Prism FBM score being 'extremely strong' for ERV Denmark and 'very strong' for ERV Sweden. Both companies had regulatory solvency margins above 200% at end-2013. The standalone profiles are constrained by the limited size of the companies, with shareholder funds (including equalisation reserves) of DKK259.2m for ERV Denmark and SEK147.1m for ERV Sweden.

RATING SENSITIVITIES
Any change in Munich Re's rating or a revision of its Outlook is likely to be reflected by ERV Denmark's and ERV Sweden's ratings.

Additionally, a key rating trigger for an upgrade would be for the companies to become a "core" part of the overall group, as determined through Fitch's group rating methodology. However, the agency views this as unlikely in the near to medium term given the small scale of the two companies.

A key rating trigger for a downgrade would be reduced strategic importance of the companies within the group. This could result from Fitch viewing travel insurance as less strategically important for Munich Re or from a strong decline in the capitalisation of the two companies.