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TEXT-Fitch affirms Storebrand Livforsikring IFS at 'BBB+'
2012年2月29日 / 下午4点23分 / 6 年前

TEXT-Fitch affirms Storebrand Livforsikring IFS at 'BBB+'

Feb 29 - Fitch Ratings has affirmed Norwegian life insurer Storebrand
Livforsikring's (SL) Insurer Financial Strength (IFS) rating at 'BBB+' and
Long-term Issuer Default Rating (IDR) at 'BBB'. Fitch has also affirmed
Storebrand ASA's (SA) Long-term IDR at 'BBB-'. SA is SL's ultimate
parent company. The Outlooks on the IFS rating and IDRs are Stable. Fitch has
also affirmed SL's subordinated debt issues at 'BB+' and SA's senior unsecured
debt at 'BB+'.	
	
The ratings actions reflect the Storebrand group's resilient performance in 2011
despite difficult market conditions. Strong capital adequacy (with healthy
buffer reserves) and the soundness of the Norwegian economy also support the
ratings. Offsetting factors are the group's exposure to a low interest rate
environment for both SL and SPP (SL's main subsidiary in Sweden; not rated),
volatile financial results and the expectation of depressed earnings.	
	
In line with Fitch's expectation, group earnings fell in 2011, due to a
combination of the low interest rate environment, a significant fall in equity
values and the group's continued efforts to rebuild buffer capital. Despite
these challenges, the group reported positive net income for 2011 of NOK681m
(2010: NOK1,480m). Fitch believes that the group can, to some extent, cope with
downside risk related to a prolonged period of low interest rates and increased
market volatility.	
	
The agency views negatively the ongoing uncertainty surrounding the development
of a new Solvency II-compliant regulatory framework in Norway. Against market
expectations, the group decided not to pay a dividend in respect of 2011,
awaiting further clarification on the new capital requirements.	
	
In addition, SL unexpectedly strengthened its longevity reserves by NOK1.1bn in
2011 and Fitch cautions that additional material reserve adjustments may be
required in the future given the continuing rise in Norwegian life expectancy.	
	
Other negative rating drivers include the group's relatively high equity
exposure as well as low fixed charge coverage as assessed by Fitch. The
portfolio allocation to equities was 12% in both SL and SPP at end-2011 and
although this is lower than 2010 (in particular in SPP where the exposure was
27% at end-2010) the agency still views the overall exposure unfavourably. The
Fitch-calculated fixed charge coverage ratio for the consolidated group remains
relatively weak at around 2.3x (based on 2011 results), down from 3.5x in 2010 .	
	
Based on the consolidated regulatory solvency position (160% at end-2011) and on
Fitch's own risk-adjusted analysis, group capital adequacy as at end-2011 was
solid, with NOK5.4bn of additional statutory reserves (equal to approximately
90% of the annual cost of minimum guarantees). This allows the group to have
higher risk appetite in seeking to achieve higher expected returns in its
profit-sharing portfolios. However, the quality of capital is negatively
affected by a significant amount of goodwill.	
	
SL's ratings could be upgraded if the company manages to strengthen, on a
sustainable basis, its buffer capital through additional statutory reserves to
maintain an amount sufficient to cover one year of minimum guarantees (around
NOK6bn). Other factors leading to a possible upgrade would include reduced
sensitivity of earnings to changes in interest rates through better asset
liability management (ALM), in particular in SPP.	
	
Conversely, the ratings could be downgraded if the exposure to equities at SPP
results in material losses to the extent that SL's consolidated regulatory
solvency margin falls below 130% or shareholders' funds declined by more than
15% from NOK18.8bn at end- 2011. Also, failure to mitigate SPP's financial
volatility over time would exert negative pressure on the ratings.	
	
Contact:	
	
Primary Analyst	
Bjorn Norrman, ACA	
Associate Director	
+44 20 3530 1330	
Fitch Ratings Limited	
30 North Colonnade	
London E145GN	
	
Secondary Analyst	
Federico Faccio	
Senior Director	
+44 20 3530 1394	
	
Committee Chairperson	
Harish Gohil	
Managing Director	
+44 20 3530 1257	
	
Media Relations: Michelle James, London, Tel: +44 0203 530 1574, Email:
Michelle.James@fitchratings.com.	
	
Additional information is available on www.fitchratings.com. The ratings above
were unsolicited and have been provided by Fitch as a service to investors.	
	
The issuer did not participate in the rating process other than through the
medium of its public disclosure.	
	
Applicable criteria, "Insurance Rating Methodology", dated 22 September 2011,
are available at www.fitchratings.com	
	
Applicable Criteria and Related Research:	
Insurance Rating Methodology	
	
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