August 21, 2012 / 3:07 PM / 5 years ago

TEXT-Fitch affirms Condor Lebensversicherung-AG

(The following statement was released by the rating agency)

Aug 21 - Fitch Ratings has affirmed Condor Lebensversicherung-AG's (Condor) Insurer Financial Strength (IFS) rating at 'A+'. The Outlook for the IFS is Stable. The affirmation reflects Condor's membership within the R+V insurance group (R+V) and its strong growth figures in 2011. The agency views Condor as "very important" to R+V based on its group rating methodology which is supported by Condor's profit-and-loss sharing agreement within the group. Condor provides access to the independent financial advisors (IFAs) distribution channel for R+V and derives its insurance business solely through IFAs, while R+V distributes its life products mainly through cooperative banks. Condor's new business volume increased 40.5% to EUR638.3m in 2011, higher than the German market average of 6.4%. Fitch expects that Condor will report strong new business volumes for 2012. Condor's net investment return rate of 4.0% was in line with the German life insurance market average of 4.1% in 2011. Through the use of a more cost intensive distribution channel and the provision of a high level of service to its customers, Condor's administration expense ratio of 3.8% and acquisition expense ratio of 5.6% were weaker than those of the market at 2.4% and 5.0% respectively. However, both ratios improved during 2011 and Fitch expects further improvements in the future, resulting from increased business volumes. The agency notes positively that Condor's lapse ratio of 4.4% was better than the market average of 5.0% in 2011. Fitch views Condor's capitalisation as strong. As part of Condor's rating review, Fitch also assessed the credit quality of R+V. Fitch views R+V to be a core part of DZ Bank AG ('A+'/Stable) and the Genossenschaftliche FinanzGruppe (GFG;'A+'/Stable). Under Fitch's insurance rating methodology, Condor benefits from a one-notch uplift from its standalone credit profile. Key rating triggers for an upgrade include further improvements in Condor's integration within R+V, for example, further progress in IT integration would be a driver for redefining Condor's strategic status within R+V as core. A key rating trigger for a downgrade would be a weakened strategic position within the group. Fitch views a downgrade caused by weakened importance as unlikely as integration of Condor has improved in recent years. However, any rating action on DZ Bank AG and/or GFG is likely to result in a similar rating action for Condor. Wiesbaden-based R+V is one of the top 10 insurance groups in Germany. R+V is a non-listed company 74%-owned by DZ Bank AG, Germany's largest central bank of the GFG. DZ Bank AG had total assets of EUR405.9bn at end-2011. R+V had gross written premiums (GWP) of EUR11.3bn in 2011 and total assets of EUR65.6bn at end-2011. According to German GAAP, Condor reported GWP of EUR232.7m (2010: EUR212.0m) in 2011 and had total assets of EUR3.2bn (2010: EUR3.2bn) at end-2011. For all of Fitch's Eurozone Crisis commentary go to here (Caryn Trokie, New York Ratings Unit)

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