OREANDA-NEWS. Fitch Ratings has affirmed German life insurers R+V Lebensversicherung AG's (R+V Life), R+V Lebensversicherung a.G.'s (R+V Mutual) and Condor Lebensversicherungs-AG's (Condor) Insurer Financial Strength (IFS) ratings at 'AA'. The Outlooks are Stable.

KEY RATING DRIVERS
Fitch continues to view R+V Life, R+V Mutual and Condor as "core" to the R+V insurance group and the ratings are therefore aligned with the agency's view of the R+V group as a whole, in line with our insurance group rating methodology.

The ratings are supported by R+V group's solid capitalisation, strong market position, and robust operating performance. Offsetting these positive rating factors is R+V group's geographical focus on Germany and its moderate underwriting profitability in non-life insurance.

One of the top five primary insurance groups in Germany, R+V group is headed by R+V Versicherung AG, which is 77%-owned by DZ Bank AG (AA-/Stable). DZ Bank AG is the largest central bank within Germany's cooperative banking group Genossenschaftliche FinanzGruppe (GFG; AA-/Stable). Fitch regards the ownership of R+V by DZ Bank AG/GFG as positive, reflecting the agency's view that the bank would support the insurance group, if necessary. This has been reflected in a two-notch rating uplift from the agency's standalone assessment of R+V group.

Fitch views the group's capitalisation as very strong, which we expect to be maintained in 2015 and 2016. In Fitch's Prism Factor Based Model (Prism FBM), R+V group scored "very strong" based on end-2014 financials. This view is supported by the group's regulatory solvency margin of 190% at end-2014.

R+V Life, R+V Mutual and Condor reported a strong operating performance for 2014. Funds for future appropriation, expense and lapse ratios were better than the market average. Fitch expects the three companies to maintain a strong operating performance in 2015. The ratios of investments in equities to total invested assets for R+V Life and R+V Mutual are higher than the German market average of 3.5%. Fitch does not view the larger equity exposure as a particular risk, given the group's very strong capitalisation.

R+V group's non-life segment reported a net combined ratio of 100.2% (2013: 103.9%) for 2014, which was weaker than the German market average of 95% (2013: 99.2%).

R+V Life is R+V group's main operating life insurer in Germany, while Condor serves as a specialist for independent financial advisors in individual life and R+V Mutual is a specialist for mid- and high-net worth clients and a pension provider. Measured by gross written premiums (GWP) in 2014, R+V Life is Germany's second-largest life insurer. For 2014, R+V Life reported GWP of EUR5.2bn and total assets of EUR46.6bn, R+V Mutual GWP of EUR99m and total assets of EUR1.6bn and Condor GWP of EUR257m and total assets of EUR3.4bn.

RATING SENSITIVITIES
Key rating triggers for a downgrade include a downgrade of GFG/DZ Bank AG's rating, a change in Fitch's view of R+V group's strategic importance to GFG/DZ Bank AG or a change in Fitch's view of the entities' core status within R+V group. A significant weakening of R+V group's standalone financial profile could also lead to a downgrade.

Key rating triggers for an upgrade include an upgrade of GFG/DZ Bank AG's ratings, and the entities maintaining their strategic importance for R+V group and GFG/DZ Bank AG.