Fitch Upgrades KBC Verzekeringen & KBC Group Re IFS to 'A'; Outlook Stable
OREANDA-NEWS. Fitch Ratings has upgraded KBC Verzekeringen's and KBC Group Re's Insurer Financial Strength (IFS) ratings to 'A' from 'A-'. Fitch has affirmed KBC Verzekeringen's Long-term Issuer Default Rating (IDR) at 'A-'. The Outlooks on the IDR and IFS ratings are Stable.
KEY RATING DRIVERS
The upgrade reflects KBC Group's (IDR: A-/Stable) repayment of EUR2bn hybrid capital plus penalty to the Flemish Region. KBC Verzekeringen's IFS rating is now one notch higher than its IDR, in line with our standard notching.
On 11 December 2015, KBC Group announced that it would repay the full outstanding tranche of state aid received in 2009 from the Flemish regional government. The repayment took place on 28 December 2015. KBC Verzekeringen's IFS rating and IDR were previously aligned because part of KBC Group's capital was in the form of hybrid capital provided by the Flemish region.
KBC Verzekeringen and KBC Group Re's ratings continue to reflect their core strategic importance within KBC Group, given the group's integrated bancassurance business model. Both companies rely on their parent for their roles, business positions and strategic direction.
KBC Group's 'A-' IDR acts as a cap on KBC Verzekeringen's IDR. The standalone IFS rating of KBC Verzekeringen is two notches higher at 'A+'. The rating does not take into account the cap represented by the lower IDR of the parent company but factors in the benefits derived by KBC Verzekeringen from being part of KBC Group, specifically regarding integrated capital management, the alignment of strategy and distribution.
The rating reflects KBC Verzekeringen's important business position in Belgium where it is the third-largest insurer. It is also underpinned by KBC Verzekeringen's strong profitability and capitalisation. The company's reported combined ratio was a strong 89% at 9M15. Its consolidated regulatory solvency II ratio is also very strong (end-September 2015: 242%), and in particular, its Fitch Prism FBM score on 2014 data was 'Extremely Strong'.
RATING SENSITIVITIES
Any changes in KBC Group's ratings are likely to result in similar changes to KBC Verzekeringen's ratings. In addition, if, in Fitch's view, KBC Insurance were to become less strategically important to KBC Group this would likely result in a downgrade.
KBC Group Re relies on KBC Verzekeringen for its role as a captive reinsurer, business position, strategic direction and asset management expertise. Any changes to its parent's ratings are likely to have a corresponding impact on KBC Group Re's ratings.
Комментарии