Moody’s has affirmed Allianz’s Aa3 insurance financial strength rating (IFSR), moving its outlook to positive from stable.
The firm confirmed that it had also affirmed the IFSR of Allianz S.p.A. at A3, of Euler Hermes at Aa3, and of Allianz Life at A1 and changed the outlook on these entities to positive from stable. At the same time, Moody’s affirmed the Aa2 IFSRs of Allianz Sach and Allianz Leben, collectively referred to as Allianz Deutschland, with stable outlook.
Moody’s said that the affirmation of the ratings reflected Allianz’s very strong market position and diversified business model, the reduced pressure from low interest rates on the group’s life business, very strong earnings which it expected will withstand pressure from macroeconomic headwinds, as well as the insurer’s very strong capitalisation.
The ratings agency also drew attention to the leading positions that Allianz takes up globally in the industry.
It said: “As a result, Allianz has built a very strong earnings track record, based on its proven ability to offset negative result drivers in part of its business with stronger performance in other parts. We expect Allianz will continue to report very strong operating profits over 2022-2024, despite some anticipated pressure from potentially lower economic growth, inflation, and heightened financial market volatility.”
Moody’s also said that Allianz’ exposure to interest rate risk has reduced ‘materially’.
It added: “Thanks to both proactive new business and back-book management, the share of unit-linked and protection products has increased and the average in force guaranteed rate has fallen to 1.8% at year-end 2021 from 2.7% at year-end 2011 and the Group has been able to preserve investment margins over this period. In addition, Moody’s believes guaranteed rate commitments are well covered for the foreseeable future thanks to very strong asset-liability management.”
Capitalisation, it maintained, has remained strong. It wrote: “The Group’s capitalization is very strong, as reflected in a Solvency II ratio of 199% at the end of the first quarter of 2022. However, Group Solvency has weakened somewhat recently due to the resolution of the Structured Alpha Funds issue, financial market volatility and high shareholder returns via dividends and share buybacks. Based on the Group’s capital management policy, we expect Allianz will maintain its Solvency II ratio at levels of about 200% going forward.”
