Moody's upgraded the long-term issuer ratings of seven European insurers and Australia's QBE Insurance Group Ltd. following the launch of a new cross-sector methodology for assigning instrument ratings for insurers.
Under the new methodology, the rating agency modified its guidance for rating certain insurance holding company instruments and now applies narrower notching for certain insurance groups domiciled in locations with enhanced regulatory supervision at a groupwide level.
The rating agency said May 30 that it raised the long-term issuer rating of Norway's Storebrand ASA to Baa3 from Ba1, Belgium-based Ageas SA/NV's rating to Baa2 from Baa3, as well as the ratings of Netherlands-based NN Group NV and French insurer Coface SA to Baa1 from Baa2.
It also raised the long-term issuer rating of Finland's Sampo Oyj to A3 from Baa1 and affirmed its short-term ratings at (P)P-2. The ratings of U.K.-based Legal & General Group PLC and Legal & General Finance PLC were upgraded to A2 from A3.
The outlooks on NN Group, Coface, Sampo, Legal & General Group and Legal & General Finance are all stable, while the outlooks on Storebrand and Ageas are positive.
The ratings actions on the European insurers reflect their domicile in the European Union or Norway and the fact that most of their operations are supervised under Solvency II or equivalent regulatory regimes.
A substantial improvement in Legal & General Group and Legal & General Finance's geographic diversification of revenues and profit could lead to a ratings upgrade, while a material deterioration in the group's solvency could lead to a downgrade.
A significant improvement of NN Group's business profile with reduced exposure to guaranteed policies could lead to a positive ratings action. Conversely, downward ratings pressure could yield from a significant reduction in capitalization.
A downgrade is unlikely for Storebrand given its positive outlook, while an upgrade on the Baa1 insurance financial strength rating on Storebrand Livsforsikring AS could lead to a similar action for the company.
As for Ageas, a ratings upgrade could result from a material improvement of the credit standing of its operating companies. Conversely, a downgrade is unlikely in the short-term given the positive outlook.
In addition, Moody's also upgraded the issuer rating of QBE to A3 from Baa1, with a negative outlook. QBE's outlook could be reverted back to stable if its one-year return on capital improves to 4% or more, while the ratings could be downgraded if its one-year capital return is 3% or less.
