Fitch Downgrades 2 South African Insurance Groups’ IFS Ratings


(The following statement was released by the rating agency) Link to Fitch Ratings’ Report: South Africa Insurance Review (Six Groups) – Rating Action Report here LONDON, December 14 (Fitch) Fitch Ratings has completed a review covering six insurance groups within South Africa focused exclusively on the impact of Fitch’s downgrade of the South African sovereign rating. The review resulted in the downgrade of the Insurer Financial Strength (IFS) ratings of Guardrisk International Limited PCC (Guardrisk PCC) to ‘BBB’ from ‘BBB+’ and RMB Financial Services Limited, RMB Structured Insurance Limited and RMB Structured Insurance Limited PCC (collectively RMBSI) to ‘BBB-‘ from ‘BBB’. The Outlooks are Stable. Fitch has simultaneously affirmed the National IFS ratings of Home Loan Guarantee Company NPC, Guardrisk Insurance Company Limited, Guardrisk Life Limited, MMI Group Limited, Liberty Group Limited and Standard Insurance Limited. On 4 December 2015, Fitch downgraded South Africa’s Long-term foreign and local currency Issuer Default Rating (IDR) to ‘BBB-‘ from ‘BBB’ and to ‘BBB’ from ‘BBB+’, respectively. The Outlooks are Stable. KEY RATING DRIVERS The downgrade of Guardrisk PCC’s IFS rating reflects the cap introduced by the downgrade of South Africa’s local currency IDR to ‘BBB’. The downgrade of RMBSI’s IFS ratings reflects its exposure to the deteriorating South African operating environment as a small niche insurer. The downgrade of South Africa’s IDRs reflects further weakness in GDP growth and estimates of growth potential, an increase in forecast gross general government debt and South Africa’s persistent current account deficit. These factors create a weaker operating environment for South Africa-based insurers, thereby weakening their credit profiles. National scale ratings have not been affected by the sovereign downgrade as the relative credit worthiness of South African insurance groups remains unchanged, in Fitch’s view. The main industry-wide risk factors to South African insurers’ ratings remain broadly unchanged, in Fitch’s view. RATING SENSITIVITIES A downgrade or upgrade of South Africa’s Long-term foreign or local currency IDRs could trigger a similar rating action on Guardrisk PCC’s and RMBSI’s IFS ratings. For the Key Ratings Drivers and Sensitivities for a specific entity, see the most recently published Rating Action Commentaries or issuer research reports. SUMMARY OF RATING ACTIONS A link to a summary report that details all of the ratings actions taken as part of the portfolio review is available via the link below under “Related Research”. The linked summary report includes: –A full list of ratings and related rating actions –A hyperlink to each rated entity’s ratings summary page on the Fitch website –Primary analyst and secondary analyst contact information –Participation status LIMITATIONS The review was limited in scope, and only included an assessment of the impact of the recent downgrade of South Africa’s IDRs, as outlined in ‘Fitch Downgrades South Africa to ‘BBB-‘; Outlook Stable’ published on 4 December 2015 on Where relevant, Fitch considered the appropriateness of the relative ranking of ratings in the South African insurance sector. This review did not include the reviews of the Santam group and the Old Mutual group, which were published on 10 and 14 December 2015 respectively on Contact: Primary Analysts Willem Loots (all except Home Loan Guarantee Company NPC) Director +44 20 3530 1808 Fitch Ratings Limited 30 North Colonnade London E14 5GN Ralf Ehrhardt (Home Loan Guarantee Company NPC) Associate Director +44 20 3530 1551 Fitch Ratings Limited 30 North Colonnade London E14 5GN Secondary Analysts Harish Gohil (all except Home Loan Guarantee Company NPC) Managing Director +44 20 3530 1257 David Prowse (Home Loan Guarantee Company NPC) Senior Director +44 20 3530 1250 Committee Chairperson Chris Waterman Managing Director +44 20 3530 1168 Media Relations: Athos Larkou, London, Tel: +44 203 530 1549, Email: Additional information is available on Applicable Criteria Insurance Rating Methodology (pub. 16 Sep 2015) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here _id=996683 Solicitation Status here Endorsement Policy here ail=31 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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