S&P Revises Allianz Marine & Aviation Outlook To Positive; Affirms ‘A-‘ Ratings

Standard & Poor’s Ratings Services announced that it has revised its outlook on the French-based Allianz Marine & Aviation (France) S.A. (AZMA-F) and the German-based Allianz Marine & Aviation Versicherungs AG (AZMA-D) to positive from stable. S&P also affirmed its “A-” long-term counterparty credit and insurer financial strength ratings on both companies.

“The outlook revision mainly reflects the improved underwriting profile of AZMA-F and AZMA-D–collectively known as AMA–which constitute the marine and aviation unit of the Germany-based Allianz group,” said the bulletin.

“The ratings on AZMA-F and AZMA-D reflect the AMA group’s strong capital base, strong competitive position in the global marine and aviation insurance markets, and good operating performance,” stated S&P credit analyst Emmanuelle Calès.

The rating agency noted, however: “Partially offsetting these positive factors are concerns over medium-term profitability in AMA’s markets, which are currently at (in aviation) or near (in marine) the top of the underwriting cycle, and the group’s reliance on reinsurance rates and protection.

“The ratings also factor in the explicit support that AMA’s ultimate parent, Allianz AG (AA-/Negative/A-1+), has provided to the group in the recent past through various agreements committing to the integration of AZMA-F and AZMA-D into a single marine and aviation insurance unit. AMA is a world leader in the niche marine and aviation insurance markets. Net premiums written totaled €440 million ($592 million) at year-end 2003.”

Calès indicated that the positive outlook reflects S&P’s “expectation that AMA will maintain or further improve its underwriting profile. This would help the group to manage the current (in aviation) and forthcoming (in marine) pricing downturn.” Her observation is another indication that the world’s insurance companies are serious about managing the cycle.

S&P noted: “Gross premiums written are expected to have decreased by approximately 5 percent in 2004, as profitability is given priority over market share. Net premiums written are likely to have increased by 15 percent by year-end 2004 on the back of smoothed reinsurance costs and increasing risk retention. AMA’s combined ratio is set to be maintained at less than 95 percent in 2004–possibly rising to approximately 100 percent in 2005 and 2006 –while the adjusted capital base is expected to remain fully adequate for the ‘A’ (strong) rating category.”