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Engels bericht: Fitch rates Reale at A with a Negative Outlook

Fitch Ratings-London/Paris-08 July 2010: Fitch Ratings has today assigned the Spanish insurer Reale Seguros Generales SA (Reale Seguros) an Insurer Financial Strength (IFS) rating of 'A-', with a Negative Outlook.


The IFS rating reflects Reale Seguros' good underwriting performance, a prudent investment profile and good regulatory capitalisation. It also reflects Fitch's view that Reale Seguros is ultimately core to Societa Reale Mutua Assicurazioni (RMA, rated IFS 'A-'/Outlook Negative), its Italian parent company and the main operating entity of Reale Mutua group (Reale Mutua). Accordingly, Reale Seguros' IFS rating and Outlook have been equalised with those of RMA. Fitch's view that Reale Seguros is core to RMA is based on a number of factors. Reale Seguros generated around 23% of Reale Mutua's consolidated non-life premiums in 2009, making Spain the largest territory for the group after Italy.


The entity's contribution to group underwriting profitability is of even greater importance, with Reale Seguros reporting a combined ratio of 95.4% against 108.7% for Reale Mutua's Italian operations. (The performance of the Italian operations reflects challenging trading conditions in the market, with adverse claims experience due to higher costs for personal injuries - for further details please see rating comment on RMA published on 22nd April 2010). RMA has been engaged in ensuring Reale Seguros operates within a group framework for risk management and financial planning. Reale Seguros trades under one brand (Reale). Reale Seguros has a highly integrated operational structure, and shares common platforms and knowledge across the group.


Reale Seguros' underwriting results show a positive track record, with a combined ratio at 95-96% on average since 2005. The reported combined ratio was a satisfactory 96.4% in 2009 (market: 93.6% at Q309), notwithstanding unfavourable trading conditions in Spain such as declining average premiums, particularly in the motor segment, and the increasing claims severity for the insurance market as a whole. Reale Seguros' reserving policies are prudent, with development from prior reserves largely favourable over the past 10 years. The insurer's capitalisation has also proved resilient to Fitch's capital adequacy stress tests. However, Reale Seguros is of a relatively limited size and operates in a competitive market in Spain with soft pricing across most lines of business. It derives over 60% of its premium volume from the motor business, making its profitability highly sensitive to trends affecting pricing and claims development in this segment. Fitch also notes that intangible assets, largely associated with the purchase of Aegon Seguros Generales in 2005, represent a very significant proportion (40%) of shareholders' funds.


Reale Seguros' rating could be downgraded if the rating of its parent company RMA is downgraded, or if the insurer's underwriting profitability was to deteriorate to such an extent that the rating of RMA is lowered. Conversely, the Outlook could be revised to Stable if RMA returns to profit, continues to show resilience to volatile and adverse conditions in the non-life market in Italy, and Reale Seguros continues to provide a positive contribution to the group's underwriting profitability.


Reale Seguros was established in 1987. The company acquired Aegon Seguros Generales in 2005, inheriting a multi-channel company and its bancassurance agreement and doubling the size of the business. Reale Seguros currently has two 50/50 bancassurance agreements: Caixa Terrassa Previsio with UNIM (merger between Caixa Sabadell, Caixa Terrassa, Caixa Manlleu) and CAI Seguros Generales with Caja de Ahorros Inmaculada. With Gross Written Premiums (GWP) of EUR754m, Reale Seguros is the 13th largest non-life insurance company in Spain with a 2.37% market share.


Applicable criteria, "Insurance Rating Methodology", dated 29 December 2009, "Non-Life Insurance Rating Methodology", dated 24 March 2010, and "Fitch's Approach to Rating Insurance Groups" dated 24 March 2010, are available at www.fitchratings.com.


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