Alte Leipziger Lebensversicherung a.G. Outlook Positive On Strong Performance; 'A-' Rating Affirmed
- In our opinion, Germany-based life insurer Alte Leipziger Lebensversicherung a.G. (Alte Leipziger) has established a favorable record of consistently strong operating performance and strong capitalization in a challenging market.
- We expect that the company will be able to continue to sustainably outperform its peers.
- We are revising the outlook to positive from stable.
- At the same time, we are affirming our 'A-' long-term counterparty credit and insurer financial strength ratings.
FRANKFURT (Standard & Poor's) June 21, 2011--Standard & Poor's Ratings Services said today that it had revised its outlook on Germany-based life insurer Alte Leipziger Lebensversicherung a. G. (Alte Leipziger) to positive from stable. At the same time, we affirmed the 'A-' long-term counterparty credit and insurer financial strength ratings. The outlook revision reflects our opinion that Alte Leipziger is well positioned to demonstrate sustainably strong operating performance relative to its competitors in a difficult operating environment over the coming years and to successfully leverage its balance sheet strength into sound new business generation at profit margins well in excess of those of its peers. In addition, we recognize further improvements in Alte Leipziger's enterprise risk management. The ratings on Alte Leipziger reflect the company's relatively strong earnings, strong capitalization, and investment profile. Offsetting factors include Alte Leipziger's concentration on the challenging German life insurance market, the company's exposure to interest-rate risk stemming from its duration mismatch, and currently low interest rates. Alte Leipziger has been able to outperform its peers with relatively strong gross surpluses in challenging market conditions on the basis of strong investment returns and strong risk margins. This is reflected by a five-year average pre-tax return on assets before bonus allocation of about 260 basis points. Although we anticipate that Alte Leipziger's gross surplus could decline if interest rates remain low on a sustained basis, we also believe that the company is in a position to maintain a strong level of earnings thanks to its stable investment performance, cautious and sustainable crediting rates offered to policyholders, and its strong margins from mortality and disability risk. Thanks to this strong earnings performance, conservative asset allocation, and its mutual status, Alte Leipziger has been able to steadily increase its reported capital and policyholder bonus reserves. Accordingly, Alte Leipziger has been able to conserve its strong capitalization despite duration mismatch risk. We view Alte Leipziger's competitive position as strong, but lacking in diversity. Our opinion is based on the company's strong position in the broker market, comparably strong regular premium income growth, and favorable new business mix with sound margins. However, we view the German life insurance market, with its relatively high guarantees on traditional products, as challenging, particularly in light of low interest rates. Consequently, Alte Leipziger's predominant focus on this market is a relative rating weakness in our view. The positive outlook reflects our expectation that Alte Leipziger will continue to outperform its peers in terms of gross surplus generation and new business profitability in challenging operating conditions. RELATED CRITERIA AND RESEARCH
- Interactive Ratings Methodology, April 22, 2009
- Use Of CreditWatch And Outlooks, Sept. 14, 2009
Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column. Alternatively, call one of the following Standard & Poor's numbers: Client Support Europe (44) 20-7176-7176; London Press Office (44) 20-7176-3605; Paris (33) 1-4420-6708; Frankfurt (49) 69-33-999-225; Stockholm (46) 8-440-5914; or Moscow 7 (495) 783-4009.
| Primary Credit Analyst: | Christian Badorff, Frankfurt (49) 69-33-999-199; christian_badorff@standardandpoors.com |
| Secondary Contact: | Wolfgang Rief, Frankfurt (49) 69-33-999-190; wolfgang_rief@standardandpoors.com |
| Additional Contact: | Insurance Ratings Europe; InsuranceInteractive_Europe@standardandpoors.com |
No content (including ratings, credit-related analyses and data, valuations, model, software, or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced, or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor’s Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers, shareholders, employees, or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness, or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an “as is” basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED, OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages.
Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. S&P’s opinions, analyses, and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment, and experience of the user, its management, employees, advisors, and/or clients when making investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. Rating-related publications may be published for a variety of reasons that are not necessarily dependent on action by rating committees, including, but not limited to, the publication of a periodic update on a credit rating and related analyses.
To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw, or suspend such acknowledgement at any time and in its sole discretion. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal, or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof.
S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain nonpublic information received in connection with each analytical process.
S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, www.spglobal.com/ratings (free of charge), and www.ratingsdirect.com (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at www.spglobal.com/usratingsfees.
Any Passwords/user IDs issued by S&P to users are single user-dedicated and may ONLY be used by the individual to whom they have been assigned. No sharing of passwords/user IDs and no simultaneous access via the same password/user ID is permitted. To reprint, translate, or use the data or information other than as provided herein, contact S&P Global Ratings, Client Services, 55 Water Street, New York, NY 10041; (1) 212-438-7280 or by e-mail to: research_request@spglobal.com.