OREANDA-NEWS. Fitch Ratings has assigned Mutual & Federal Risk Financing Limited's (M&F RF) a National Insurer Financial Strength (IFS) rating of 'AAA(zaf)'. The Outlook is Stable.

KEY RATING DRIVERS
Fitch considers M&F RF as "Core" to the Mutual & Federal Group under Fitch's insurance group rating methodology. As a result M&F RF's rating is aligned to that of its parent, Mutual & Federal Insurance Company Limited (M&F).

M&F RF is a wholly owned subsidiary of M&F, which supports its alternative risk transfer insurance activities, a core activity for M&F. Its main purpose is to house cell captive business, which it is separately licensed to write, sold through M&F's 'Corporate and Niche' business division.

M&F RF is integrated with M&F with shared branding, staff and physical infrastructure.

In 2014 M&F RF wrote 9.1% of the M&F group gross written premiums, and through its cell captive structure retains only a small portion of the overall risk. It reported an underwriting margin of 16% (2013 adjusted: 10.9%).

Fitch believes that M&F RF is adequately capitalised based on the minimum statutory requirement. At end-14 M&F RF's international solvency ratio was 109%, and its interim measures capital adequacy requirement cover 315%. Fitch believes that M&F RF would be able to call on cell owners' capital and group support, should the need arise.

Fitch considers M&F as "Core" to the Old Mutual group under the agency's insurance group rating methodology, based on its alignment with Old Mutual's strategy and integration of management into the Old Mutual group.

RATING SENSITIVITIES
Given Fitch's view that M&F RF is "Core" to the Mutual & Federal group under Fitch's insurance group rating methodology, any upgrade or downgrade of M&F's ratings would be reflected by M&F RF's ratings.

A downgrade could also be triggered by a change in M&F RF's "Core" status. This could be a result of a change in M&F's strategy that affects its risk transfer activities.