กรุงเทพฯ--14 ก.ค.--Standard & Poor's
TOKYO (Standard & Poor's) July 14, 2014--Standard & Poor's Ratings Servicestoday said that it has raised its financial strength and long-termcounterparty credit ratings on Allianz Fire and Marine Insurance Japan Ltd.(AZFM) to 'AA' from 'AA-'. The outlook on the ratings is stable.
The upgrade follows our view that AZSE and AGCS SE's financial support forAZFM would prevail even under a hypothetical sovereign stress scenario.Following discussions with management at AGCS SE and AZSE, we are now moreconfident of their strong commitment to support AZFM in such a scenario. Ourview also reflects the growing integration of AGCS SE's global franchise. Insuch cases where we assume unconditional support even under sovereign stress,our group rating methodology criteria allow the assignment of a rating on coreoperating companies above the respective sovereign.
While AZFM is relatively small--writing approximately €70 million in grosswritten premiums in 2013 compared with €5 billion at AGCS SE and €110 billionat AZSE--AZFM's international corporate clientele overlaps with that of AGCSSE and AZSE. In our view, any failure to support AZFM, even in ahypotheticalsovereign stress scenario, might materially impair the reputation of theglobal AGCS SE franchise. Also, AGCS SE reinsures more than 90% of AZFM'sinsurance premiums. We therefore continue to regard AZFM as a "core"subsidiary to AGCS SE.
The stable outlook reflects that on the ratings on AGCS SE. As a coreoperating company of AGCS SE, the ratings and outlook on AZFM will move intandem with those on AGCS SE. Although considered an unlikely scenario, wecould lower the ratings on AZFM if, in our opinion, the company no longer
exhibits the characteristics of a core subsidiary of AGCS SE. We might alsolower the ratings if we believe the ability and willingness of the parent tosupport the company during stress associated with a sovereign default hasbecome less certain.