S&P Global Ratings considers Allianz Global Risk US Insurance Co.’s (AGRUS) continuing underperformance relative to peers as a hindrance to the performance of its parent Allianz Global Corporate & Specialty (AGCS), revising its outlook on AGRUS to negative from stable.
S&P believe the recent change in CEO at AGCS indicates a potential change in strategy concerning AGRUS, and if the underperformance is not rectified, AGRUS’ core group status could be undermined.
The negative outlook reflects S&P’s view that it could lower the ratings over the next 12-24 months by one notch if they believed AGRUS’ operating performance will not improve significantly.
Overall, S&P sees AGCS’ US industrial business, written by AGRUS, as having the most significant negative effect on AGCS’ underwriting results.
The ratings and outlook on AGCS and its other subsidiaries, as well as their group status, remain unchanged.
The ratings agency does acknowledge that the Allianz group remains committed to its industrial business, to AGRUS, and to its intercompany pool members, and notes how action has been taken to improve operating performance.
Following the CEO change, S&P will monitor if existing and any new measures, as well as a potential change in strategy regarding AGRUS, leads to a significant and maintained improvement in AGRUS’ operating performance.
