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Fitch Affirms MutRe's IFS at 'A-'; Outlook Stable
July 17, 2013 / 1:42 PM / 4 years ago

Fitch Affirms MutRe's IFS at 'A-'; Outlook Stable

(The following statement was released by the rating agency) PARIS/LONDON, July 17 (Fitch) Fitch Ratings has affirmed MutRe's Insurer Financial Strength (IFS) rating at 'A-' with a Stable Outlook. KEY RATING DRIVERS The affirmation reflects the company's strong capital position, the financial flexibility provided by its committed shareholder base, its consistent strategy and its solid franchise in the French accident and health reinsurance market. The rating remains constrained by the company's small size and geographical concentration, modest profitability and its exposure to potential pandemic risks not fully covered by the company's retrocession programme. In addition, Fitch believes that the company's size makes it more susceptible than larger companies to operational risks and to changes in the external operating environment. According to Fitch's own risk-based capital assessment, MutRe's capitalisation remains strong and commensurate with the rating level. The regulatory Solvency I ratio was slightly up at 201% at end-2012 (195% in 2011). MutRe's net profit recovered to EUR3.6m in 2012 reflecting improved underwriting results with a net combined ratio of 103% (106% in 2011). Nevertheless, the low interest rate environment continues to penalise investment return as assets are managed relatively cautiously and invested mainly in high-quality fixed-income assets. Fitch expects MutRe's profitability to remain relatively resilient in the foreseeable future. MutRe is a French reinsurance company with shareholder's funds of EUR120m and gross written premiums of EUR365m in 2012. Major business lines are health (58%), protection (mostly death and disability, 33%) and long term care products (9%). MutRe predominantly offers proportional reinsurance treaties to more than 50 French primary insurers, mostly mutual organisations. The company currently employs 26 staff. RATING SENSITIVITIES Key ratings triggers for a downgrade include a failure to improve profitability (as measured, for example, by the three-year average combined ratio not improving to below 105%) or if MutRe was unable to renew contracts. In addition, the rating could be downgraded if there was a sustained decline of the regulatory solvency ratio to below 170%. An upgrade of the ratings is unlikely in the medium term, given the financial and business profile of the company, in particular its size and lack of significant diversification. Contact: Primary Analyst Anais Daveine Associate Director +33 1 4429 92 80 Fitch France S.A.S. 60, rue de Monceau 75008 Paris Secondary Analyst Marc-Philippe Juilliard Senior Director +33 1 44 29 91 37 Committee Chairperson Harish Gohil Managing Director +44 20 3530 1257 Media Relations: Francoise Alos, Paris, Tel: +33 1 44 29 91 22, Email: francoise.alos@fitchratings.com; Hannah Huntly, London, Tel: +44 20 3530 1153, Email: hannah.huntly@fitchratings.com. Additional information is available at www.fitchratings.com. Applicable criteria, 'Insurance Rating Methodology' dated 11 January 2013, are available at www.fitchratings.com. Applicable Criteria and Related Research: Insurance Rating Methodology — Amended here Additional Disclosure Solicitation Status here 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 PUBLIC WEBSITE '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.

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