S&P Revises Outlook on If P&C Group to Stable

August 12, 2003

Standard & Poor’s has revised its outlook on Sweden-based If Property & Casualty Insurance Ltd. (publ) and Finland-based If P&C Insurance Co. Ltd. to stable from negative, following six consecutive quarters of improved earnings. At the same time, Standard & Poor’s affirmed its ‘A-‘ long-term counterparty credit and insurer financial strength ratings on both companies, which are operating entities of the If P&C Insurance group (If).

In addition, Standard & Poor’s affirmed its ‘BBB’ subordinated debt rating on the EUR200 million callable notes due 2021 issued by If Property & Casualty Insurance Ltd. (publ).

“The ratings reflect If’s improving earnings, strong business position in the Nordic non-life insurance market, strong financial flexibility, and strong capital adequacy,” said Standard & Poor’s credit analyst Peter McClean. These positive factors are partially offset by the company’s weak presence in Denmark.

If was formed in December 1999 by the merger of the non-life activities of the Storebrand (Storebrand ASA; BBB-/Stable/–) and Skandia (Skandia Insurance Co. Ltd.; A/Stable/–) insurance groups to create a Nordic non-life insurance group. In January 2002, If merged with the non-life insurance businesses of the Finnish financial services group Sampo (Sampo PLC; not rated), which consequently joined Storebrand and Skandia as a shareholder of If.

“The stable outlook reflects Standard & Poor’s expectation that If will
maintain earnings through the cycle at a level that will enable the group to build capital from its own resources,” said Mr. McClean. A combined ratio of 103 percent is expected in 2003.

Capital adequacy should remain strong, and is not expected to fall below 130 percent in 2003. Quality of capital is expected to improve as retained earnings account for an increasing proportion of equity.

If’s business position is expected to remain strong. The group should maintain its leading position in the Nordic non-life insurance market, and gross premium income is expected to increase by about 2 percent to more than Swedish krona 39 million ($4.8 million).

If’s financial flexibility is expected to remain strong, with continued
support from its shareholders.

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