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TEXT-Fitch may change SNS REAAL Schadeverzekeringen rating
July 16, 2012 / 6:49 PM / 5 years ago

TEXT-Fitch may change SNS REAAL Schadeverzekeringen rating

(The following statement was released by the rating agency)

July 16 - Fitch Ratings has placed SRLEV and REAAL Schadeverzekeringen’s ‘A-’ Insurer Financial Strength (IFS) ratings on Rating Watch Evolving (RWE). The RWE reflect SNS Reaal’s announcement that it has appointed advisors to analyse various capital strengthening options. In this context, Fitch believes the sale of the insurance operations, either partly or in total, is a possibility. This raises uncertainties concerning the future business position and ownership of the group’s insurance activities. SNS Reaal, the group holding company, currently has two main subsidiaries: SNS Bank, which operates most of the group’s banking businesses, and Reaal, which runs most of the insurance activities. In 2008 the Dutch state injected EUR750m of capital in SNS Reaal. At end-2011, a nominal amount of EUR565m remained outstanding, of which EUR400m had been allocated to the insurance operations. Although the state capital injection is perpetual, SNS REAAL has given an undertaking to the European Commission to repay these securities by end-2013 at 1.5x par value. In Fitch’s opinion, the group’s insurance operations are the most likely internal source of such a repayment within that timeframe. SNS Bank continues to experience significant strains on earnings and capital from its large and weak property finance exposures that are in run-off.. Additional information on SNS Bank is available in ‘Fitch Affirms SNS REAAL & SNS Bank at ‘BBB+'; Insurance Activities IFS at ‘A-‘’ dated 8 March 2012 at Although no final decision has been made yet, Fitch expects capital raising initiatives to be taken in order to strengthen the group solvency. The agency views the sale of the group’s insurance operations, either partly or in total, as a possibility. The RWE will be resolved on the completion of a transaction to sell the insurance operations, or if SNS Reaal decides to pursue an alternative option to strengthen capital. If the insurance operations are acquired by a financially stronger group, the ratings of SRLEV and REAAL Schadeverzekeringen could be upgraded. However, if the insurance operations are sold to a financially weaker group, the ratings of these insurers could be downgraded. Alternatively, if SNS Reaal were to pursue a different option to the sale of the insurance operations, the ratings of these insurers may be affirmed. SNS REAAL is a large financial services group focused on retail banking, individual insurance and pension activities in the Netherlands. SNS REAAL’s insurance activities (including REAAL Verzekeringen and Zwitserleven) represent the second-largest life insurer in the Netherlands with about 16% market share and around EUR35bn of assets under management. SNS Bank is the fourth-largest bank in the Netherlands with a 10% market share of savings deposits. (Caryn Trokie, New York Ratings Unit)

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