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Fitch Assigns Final Ratings to ConQuest 2014-2 Trust
December 21, 2014 / 6:02 PM / 3 years ago

Fitch Assigns Final Ratings to ConQuest 2014-2 Trust

(The following statement was released by the rating agency) Link to Fitch Ratings' Report: 2015 Outlook: New Zealand Insurance here SYDNEY/SINGAPORE, December 21 (Fitch) Fitch Ratings says in a new report that its Rating Outlook for the New Zealand insurance sector remains Stable. The non-life and life sector outlooks, an indicator of fundamental trends, are also stable. The agency believes New Zealand's concentrated insurance sector is well placed heading into 2015 and benefits from a stronger regulatory regime, conservative investment portfolios and improving earnings outlook, and does not foresee a significant number of rating changes over the next 12-24 months. The New Zealand prudential regulatory framework has strengthened, which in turn has benefited the overall credit profile of the insurance sector. Licensing requirements incorporating a risk-based capital regime have been implemented, and development continues on improving risk management frameworks. Moreover, Fitch believes prudential supervision will continue to mature as the regulator develops its data collection requirements and enhances its supervisory processes. The New Zealand insurance sector is concentrated in both the life and non-life sectors. However, despite concerns over reduced competition or increased systemic vulnerability, the regulators allowed mergers to result in one insurance group gaining a 50% share of the non-life market. Subsequently, future significant mergers and acquisitions cannot be ruled out over regulatory concerns. In the non-life sector an increased regulatory capital requirement for extreme earthquake risk have driven a higher reinsurance requirement, although reinsurance rates have softened. The current requirement to hold capital against a net (after reinsurance) exposure to a 1-in-500 year event will ultimately increase to a 1-in-1000 year event. At these return periods, the error of margin can be extremely large; however, the local exposures do benefit from being included in main catastrophe programs of the major Australian insurers. New Zealand insurers' investments are heavily weighted toward highly rated cash and fixed-income securities. Aggregated financial statements show that 90% of total investments made by the five-largest non-life insurers, and 57% of total investments made by of the seven-largest life insurers, were in these classes. Moreover, 80% of securities in the non-life and 86% of securities in the life group were rated 'AA-' or higher. Fitch expects New Zealand insurers to maintain their conservative approach to investments in 2015, with investment portfolios that are heavily weighted towards highly rated cash and fixed-income securities. Investment yields have stabilised following a period of decline, and as a result of large holdings of short duration securities an increase in interest rates would have a relatively quick and large positive impact. The stable sector outlook reflects Fitch's expectation that the market will be supported by New Zealand's robust economic performance. Moreover, as New Zealand insurers are subsidiaries of larger - mainly Australian - insurance or financial institution groups, the performance of the Australian economy could factor into the Outlook. A change in the credit profile of the group could ultimately impact the credit profile of the New Zealand insurance entity. M&A activity could have a positive impact on the credit profiles of New Zealand insurers if it results in a stronger franchise, but could be negative if debt-funded transactions significantly increased financial leverage. The report, "2015 Outlook: New Zealand Insurance", is available at or by clicking on the link in this media release. Contacts: John Birch Director +61 2 8256 0345 Fitch Australia Pty Limited Level 15, 77 King Street, Sydney, NSW 2000 Siew Wai Wan Senior Director +65 6796 7217 Jeffrey Liew Senior Director +852 2263 9939 Media Relations: Leni Vu, Sydney, Tel: +61 2 8256 0326, Email: Additional information is available at ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S FREE WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Fitch Australia Pty Ltd holds an Australian financial services licence (AFS licence no. 337123) which authorises it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001.

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