OREANDA-NEWS. Fitch Ratings has affirmed German life insurers R+V Lebensversicherung AG's (R+V Life), R+V Lebensversicherung a. G.'s (R+V Mutual) and Condor Lebensversicherungs-AG's (Condor) Insurer Financial Strength (IFS) Ratings at 'AA'. The Outlooks are Stable.

KEY RATING DRIVERS

Fitch views R+V Life, R+V Mutual and Condor as 'core' to the R+V insurance group and the ratings are therefore aligned with the agency's view of the R+V group as a whole, in line with our insurance group rating methodology.

The R+V group's holding company is R+V Versicherung AG, which is 92%-owned by DZ Bank AG (Issuer Default Rating (IDR) AA-/Stable). DZ Bank AG is the central bank within Germany's cooperative banking group Genossenschaftliche FinanzGruppe (GFG; AA-/Stable). Fitch takes a positive view of the ownership of the R+V group by DZ Bank AG/GFG in that the bank would support the insurance group, if necessary. This has been reflected in a two-notch rating uplift from the agency's standalone assessment for the R+V group's implied IDR.

The ratings are supported by the R+V group's solid capitalisation, strong market position, and robust operating performance. Offsetting these positive rating factors is the R+V group's significant duration gap in the German life business and a geographical focus on Germany.

Fitch assesses the group's capitalisation as 'very strong', which we expect to be maintained in 2016. Under Fitch's Prism Factor Based Model (Prism FBM), the R+V group scored 'very strong' based on end-2015 financials. This was supported by the group's regulatory solvency I margin of 185% at end-2015.

For 2016 Fitch expects the R+V group to maintain the strong operating performance it reported in 2015. However, the R+V group's non-life segment reported a net combined ratio of 101.3% (2014: 100.2%) for 2015, which was weaker than the German market average of 95% (2014: 94.1%). Fitch expects that the R+V group's net combined ratio will remain weaker than the German market average for 2016.

The R+V group is one of the top five primary insurance groups in Germany. In 2015, the group strengthened its market position as gross written premiums (GWP) for German primary insurance increased 5.7% in 2015 while the German market reported GWP growth of only 0.2%.

Fitch assesses the R+V group's asset/liability and liquidity management at 'BBB' (ALM score). Compared with the group's rating, the weak ALM score is primarily driven by the R+V group's large duration mismatch for the German life business. Fitch believes that the R+V group's asset duration is below the average duration of German life insurers.

R+V Life is the R+V group's main operating life insurer in Germany, while Condor serves as a specialist for independent financial advisors in individual life and R+V Mutual is a specialist for mid - and high-net worth clients and a pension provider. Measured by GWP in 2015, R+V Life is Germany's second-largest life insurer.

RATING SENSITIVITIES

Key rating triggers for a downgrade include a downgrade of GFG/DZ Bank AG's ratings, a change in Fitch's view of the R+V group's strategic importance to GFG/DZ Bank AG or a change in Fitch's view of the entities' core status within the R+V group.

Key rating triggers for an upgrade include an upgrade of GFG/DZ Bank AG's ratings, and the entities maintaining their strategic importance for the R+V group and GFG/DZ Bank AG.