March 20, 2013 / 4:58 PM / 5 years ago

Fitch Rates AG Insurance's USD550m Undated Subordinated Notes 'BBB+'

(The following statement was released by the rating agency) PARIS/LONDON, March 20 (Fitch) Fitch Ratings has assigned AG Insurance's USD550m undated subordinated notes a final rating of 'BBB+', following receipt of final documentation which conforms with information previously received. KEY RATING DRIVERS The rating assigned is in line with Fitch's standard notching methodology. The proceeds of the issue will be used in priority to redeem, fully or partially, the outstanding perpetual subordinated loans of Ageas Hybrid Financing SA. The remaining proceeds will be used for general corporate purposes. The issue will first be callable in 2019. The securities will pay a fixed annual coupon of 6.75% for six years until the initial call date. Unless the bonds are called at that time, the interest rate will convert into a floating rate, payable semi-annually and based on six-year U.S. dollar mid swap rate plus a margin. The notes are subordinated to senior creditors and are deferrable at the option of the issuer, subject to a 'dividend pusher' clause with a look-back period of six months. According to the terms and conditions, the new bond is expected to qualify for Tier 2 capital recognition under Solvency 2 and currently qualifies for 100% regulatory capital credit under Solvency 1. Under Fitch's methodology, this instrument will qualify as 100% capital within Fitch's risk-based capital assessment and will qualify as 100% debt in Fitch's financial leverage calculations. AG Insurance's financial leverage ratio is expected to remain within a range that is compatible with the group's rating level. RATING SENSITIVITIES The debt rating is subject to the same rating factors that might affect AG Insurance's Long-Term Issuer Default Rating (IDR). Key rating triggers that could lead to a downgrade include poor profitability or the inability to maintain solvency at the historical level, around 200% of the regulatory minimum. An upgrade of the ratings is unlikely in the medium term, given the company's financial and business profile, in particular its lack of geographical diversification. AG Insurance is rated as follows: --Insurer Financial Strength Rating: 'A+'; Outlook Stable --Issuer Default Rating: 'A'; Outlook Stable 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 4429 91 37 Committee Chairperson Harish Gohil Managing Director +44 20 3530 1257 Media Relations: Hannah Huntly, London, Tel: +44 20 3530 1153, Email: hannah.huntly@fitchratings.com. Additional information is available at www.fitchratings.com. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings. Applicable criteria, 'Insurance Rating Methodology', dated 11 January 2013, is available at www.fitchratings.com. Applicable Criteria and Related Research Insurance Rating Methodology — Amended 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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