A.M. Best Co. has affirmed the financial strength rating (FSR) of ‘A+’ (Superior) and the issuer credit rating (ICR) of “aa” of Germany’s Allianz Global Corporate & Specialty AG (AGCS AG). Best also affirmed the FSR of ‘A+’ (Superior) and the ICRs of “aa” of Allianz Global Corporate & Specialty (France) and Allianz Global Corporate & Specialty North America, headquartered in Burbank, Calif. The outlook on all of the ratings remains stable.
Best said the ratings reflect its view that AGCS AG, AGCS France and AGCS NA are an “integral part of the strategy of their ultimate parent company,” Germany’s Allianz Societas Europaea (Allianz SE).
The AGCS companies contribute a significant part of the consolidated non-life gross premium income of Allianz SE and the companies are the group’s primary risk carriers for corporate and specialty risks. Support from Allianz SE is underpinned by a profit and loss absorption agreement provided to AGCS AG.
In addition Best pointed out that the “ratings of AGCS France and AGCS NA reflect the operational integration of these companies into AGCS AG’s global processes and management structure.
“The stand alone risk-adjusted capitalization of AGCS AG is likely to remain strong in 2009, underpinned by significant equalization reserves. AGCS AG’s profit and loss absorption agreement requires Allianz SE to meet any net losses incurred at AGCS AG under German GAAP. However, the agreement also requires AGCS AG to upstream all net income to the parent company thereby limiting the accumulation of capital via earnings retention.”
Best said it “expects a resilient underwriting result from AGCS AG in 2009, despite a marginal anticipated deterioration in the company’s combined ratio from 83.6 percent in 2008 and a likely decline in investment income.”
Citing those factors, Best indicated that it expects “AGCS AG’s 2009 income before tax and before equalization reserves to decline to the range €300 million to €320 million [$446 million to $476 million] in 2009 from €341 million [$507 million] in 2008.” Best added that the “recession has affected the claims environment in 2009, drawing a close to the favorable claims experience that supported performance in 2008.”
In Best’s view, AGCS AG’s excellent business profile in global industrial lines and specialty lines markets “supports its broadly diversified underwriting portfolio.” Best said it expects AGCS AG’s gross premium income to increase slightly from €2.2 billion [$3.27 billion] in 2008, primarily due to portfolio transfers, although partly offset by a decrease in business ceded from other Allianz SE group companies.”
Source: A.M. Best – www.ambest.com
Was this article valuable?
Here are more articles you may enjoy.