LONDON--(BUSINESS WIRE)--As a result of the continued negative developments regarding the eurozone sovereign debt crisis, A.M. Best Europe – Rating Services Limited is taking rating actions on a number of European (re)insurers. Amongst them, A.M. Best has affirmed the issuer credit rating (ICR) of “a-” of the non-operating holding company, Aviva plc (Aviva) (United Kingdom), and the ICR of “a+” and financial strength rating (FSR) of A (Excellent) of Aviva’s subsidiary companies. Concurrently, A.M. Best has affirmed the debt securities issued by Aviva and assigned a rating of “bbb+” to USD 400 million subordinated debt issued by Aviva in November 2011. In addition, A.M. Best has assigned an FSR of A (Excellent) and ICR of “a+” to Aviva Insurance Limited (United Kingdom). A.M. Best also has affirmed and withdrawn the FSR of A (Excellent) and ICR of “a+” of Aviva Insurance UK Limited at the company’s request. The ratings of Delta Lloyd NV also have been withdrawn, as Aviva is no longer a majority shareholder and no longer consolidates Delta Lloyd NV. All ratings have been placed under review with negative implications. (Please see link below for a detailed listing of the ratings.)
These rating actions were driven by Aviva’s exposure to investments in several peripheral eurozone economies, Italy in particular.
A.M. Best’s rating actions on Aviva and other European (re)insurers reflect their exposure to the continued deterioration of the sovereign creditworthiness of several eurozone countries and the negative economic outlook for the region. A.M. Best has been actively monitoring this crisis and released reports on related (re)insurers’ exposure in September and November of this year. The rationale for taking rating action at this point is largely attributable to the current level of credit and liquidity risk for insurers operating within the eurozone countries—most notably Italy and Spain. The perceived strain on the economies of these countries and companies operating within their borders is growing rapidly with very little evidence of a solution being formulated to address near-term concerns.
The ratings for Aviva will remain under review with negative implications while A.M. Best examines this group’s exposure to a prolonged adverse economic environment within the eurozone. Of particular concern to A.M. Best is the exposure to Italy and Spain’s sovereign bonds and the potential for contagion into other asset classes, particularly holdings of European bank securities. In addition, A.M. Best will assess the likely impact of a prolonged financial crisis and recessionary environment on these carriers’ market position and ongoing business operations.
Upward rating pressures are unlikely at this point.
Negative rating actions could occur if there were a worsening of risk-adjusted capitalisation tied to investment losses or a deterioration of the operating environment in key territories.
For a complete listing of Aviva plc and its domestic and international property/casualty and life/health subsidiaries, FSRs, ICRs and debt ratings, please visit www.ambest.com/press/121501avivaplc.pdf.
The principal methodology used in determining these ratings is Best’s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilised include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding Universal BCAR”; “Understanding BCAR for Property/Casualty Insurers”; “Rating Members of Insurance Groups”; “Natural Catastrophe Stress Test Methodology”; and “A.M. Best’s Ratings & the Treatment of Debt”. Methodologies can be found at www.ambest.com/ratings/methodology.
In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.
A.M. Best Europe – Rating Services Limited is a subsidiary of A.M. Best Company. Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
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