Fitch affirms DEVK'S IFS
Global rating agency Fitch has affirmed DEVK Deutsche Eisenbahn Versicherung Sachund HUK-Versicherungsverein a.G. Betriebliche Sozialeinrichtung der Deutschen Bahn's (DEVK nonlife) and DEVK Deutsche Eisenbahn Versicherung Lebensversicherungsverein a.G. Betriebliche Sozialeinrichtung der Deutschen Bahn's ( DEVK life) Insurer Financial Strength (IFS) ratings at 'A+'. At the same time, the agency has affirmed DEVK non-life's main subsidiaries' IFS ratings at ' A+' and the subsidiary Echo Rueckversicherungs- AG's (Echo Re) IFS rating at 'BBB+'. The Outlook on Echo Re's IFS rating is Positive. All other Outlooks on the IFS ratings are Stable.
The affirmations reflect the group's robust capitalisation, the strong reserving methodologies of DEVK non-life, and its healthy market position within the motor and household contents insurance lines. DEVK non-life's current underwriting profitability is still pressured by Germany's competitive motor insurance market. However, DEVK non-life's average motor premium per policy has been increasing since 2010 and DEVK non-life's underwriting performance continued to improve since 2011. Fitch expects this trend to continue in 2013.
Fitch believes that Echo Re has built up a reasonable franchise in the Near Eastern and Middle Eastern region, and expects Echo Re to play a key role in DEVK's reinsurance operations in Asia. Fitch expects that Echo Re has expanded its franchise and will have achieved strong gross written premiums (GWP) growth in the Middle Eastern region and Asia in 2012.
Fitch views DEVK group's capital generation as strong. DEVK non-life's shareholder funds were EUR1,376m at end2011 and Fitch expects an increase of more than EUR50m for both 2012 and 2013.
Fitch believes that DEVK non-life's claims reserving methods are strong enough for it to withstand Germany's motor line competition without losing market share or its reported capitalisation deteriorating. As the motor line generates over 50% of DEVK's non-life GWP, the development of motor premium rates will significantly influence DEVK's underwriting profitability.