Fitch Downgrades Amlin's IFS to 'A'; Outlook Stable
OREANDA-NEWS. Fitch Ratings has downgraded Amlin AG's and Amlin Insurance SE's Insurer Financial Strength (IFS) ratings to 'A' from 'A+' and removed them from Rating Watch Negative (RWN). The Issuer Default Rating (IDR) of Amlin's holding company, Amlin Plc, has been affirmed at 'A-' and removed from RWN. The Outlooks are Stable. Amlin plc's GBP230m subordinated notes have been affirmed at 'BBB-' and removed from RWN. A full list of rating actions is at the end of this commentary.
KEY RATING DRIVERS
The rating actions follow the completion of the acquisition of Amlin by MSI (IFS: A/Stable), a subsidiary of MS&AD Insurance Group (MS&AD Group).
The IFS ratings of Amlin AG and Amlin Insurance SE are capped by the new owner's rating, which has resulted in the one-notch downgrade. This cap reflects the risk that if MS&AD Group were to come under financial stress, it could seek to extract capital or other resources from Amlin to support the rest of the group.
Fitch considers Amlin to be 'Very Important' in terms of strategic status within the MS&AD Group. This may be revised to 'Core' over time with evidence of increased integration and seasoning.
MSI reported net premiums written of JPY1,697bn (approximately GBP9.3bn) and net income of JPY105bn (approximately GBP575m) in the 12 months ending 31 March 2015. In the six months ending 30 June 2015, Amlin reported gross written premiums of GBP2bn (FY2014: GBP2.6bn) and profit before tax of GBP143m (FY2014: GBP259m).
The key rating trigger that could result in an upgrade of Amlin would be an upgrade of MSI's IFS rating. Conversely, a downgrade of MSI's IFS rating would result in a downgrade of Amlin.
Also, evidence of increased integration between Amlin and MS&AD Group could lead to an upgrade of Amlin Plc's IDR and subordinated debt rating.
FULL LIST OF RATING ACTIONS
Amlin AG: IFS downgraded to 'A' from 'A+'; removed from RWN; Outlook Stable
Amlin Insurance SE: IFS downgraded to 'A' from 'A+'; removed from RWN; Outlook Stable
Amlin plc: IDR affirmed at 'A-'; removed from RWN; Outlook Stable
Subordinated debt: Long-term rating affirmed at 'BBB-'; removed from RWN