SVB, Credit Suisse e ora Deutsche Bank: è l’inizio di una crisi del sistema bancario?

A cura di Giorgio Broggi, Quantitative Analyst di Moneyfarm. Oggi il panico bancario sembra essere quantomeno parzialmente diminuito, con Deutsche Bank in positivo dopo l’apertura dei mercati, seppur non abbia ancora recuperato dopo la caduta di venerdì. La tensione e il nervosismo rimangono alti anche se i fondamentali, a nostro parere, sono abbastanza solidi da reggere le tensioni per il momento. Ci aspettiamo una settimana altamente volatile, dopo un periodo intenso per il sistema bancario globale e le banche centrali. Occorre sottolineare, però, come il sistema bancario europeo e statunitense oggi sia più solido che in passato e che, a differenza del 2008, al momento non vi sono titoli tossici in grado di scatenare conseguenze negative a cascata. Il grafico seguente paragona il tier 1 ratio di oggi a quello della Grande Crisi finanziaria, dove con tier 1 ratio si intende l’indicatore che valuta il grado di capitalizzazione di una banca in rapporto agli assets (pesati per il rischio) e il rischio che grava sulla banca stessa. Dal grafico risulta evidente, per prima cosa, che le banche dei Paesi Sviluppati sono certamente più robuste rispetto al 2008. Inoltre, le banche europee sono certamente più solide delle contropartiamericane. Crediamo che questi numeri, già molto robusti, verranno ulteriormente rafforzati con questa crisi. Sul fronte USA, si nota come le riserve delle banche americane risultino ben superiori ai livelli pre-2008, soprattutto per quanto concerne i grandi istituti di credito, che presentano una situazione ancora relativamente solida, nonostante la volatilità del 2022. Le banche di dimensioni medio-piccole, invece, pur essendo più esposte al rischio, non rappresentano una così grave minaccia per il sistema bancario e l’economia globale. Tutto ciò ci porta a concludere che, se da una parte il sistema bancario, anche grazie all’azione perentoria delle banche centrali, rimane sufficientemente resiliente, dall’altro gli effetti di questa crisi si ripercuoteranno anche sull’economia reale. Prevediamo quindi un rallentamento dell’attività economica: più le banche assumeranno posizioni conservatrici, più ci aspettiamo che le condizioni del credito si inaspriranno, provocando verosimilmente effetti di medio termine anche su famiglie e imprese, dal momento che è aumentata anche la probabilità di una recessione nei prossimi 12 mesi. D’altro canto, la probabile stretta sul credito e il rallentamento delle economie avranno quantomeno un impatto positivo sull’inflazione.È importante sottolineare che le implicazioni della crisi bancaria sul percorso di rialzo dei tassi non sono certe, con la Bce che ha ribadito l’importanza di non confondere stabilità finanziaria e stabilità dei prezzi. La Banca Centrale Europea ritiene infatti che i suoi strumenti di bilancio siano in grado di gestire la stabilità finanziaria dell’Eurozona, lasciando che i tassi di interesse si occupino dell’inflazione. La Fed, da parte sua, ha alzato i tassi, anche se in modo meno incisivo, dando peso alle turbolenze del settore bancario, ma mantenendo come obiettivo primario la lotta all’inflazione. La nostra diversificazione si rivela efficace, con le posizioni in obbligazioni sovrane che hanno registrato buone performance compensando alcune delle componenti più rischiose dei portafogli. (abstract by http://www.moneyfarm.com)

Credit Outlook 2023: inflazione, tassi e mercato energetico

Inflazione, andamento dei tassi e prezzi dell’energia impattano negativamente sull’evoluzione del profilo di rischio delle imprese non finanziarie italiane, in continuità con quanto osservato dall’inizio del conflitto in Ucraina e in controtendenza rispetto ai segnali di ripresa visti nella seconda parte del 2021. L’instabilità della situazione macroeconomica e geopolitica, infatti, si riflette anche sullo scenario predittivo base, o ottimistico, che al momento è dato come più verosimile: la probabilità di default delle aziende italiane passa dal 5,68% di dicembre 2022 al 5,80% di dicembre 2023 (+2%), rimanendo significativamente al di sopra del 4,45% di fine 2019. A dirlo è Cerved Rating Agency, l’agenzia di rating italiana specializzata nella valutazione del merito di credito di imprese e nella misurazione delle performance ESG, che nel suo recente Credit Outlook 2023 ha aggiornato le stime analizzando, come di consueto, un portafoglio di oltre 18.000 aziende rappresentativo dell’economia italiana. In uno scenario avverso, con un sensibile peggioramento della congiuntura economica e un nuovo rialzo dei prezzi energetici (che invece al momento sono in calo, così come l’inflazione) e dei tassi di interesse, la probabilità di default salirebbe addirittura al 7,23%, ma attualmente questa ipotesi non è la più quotata. Nel complesso, però, il sistema economico è sano. Il Credit Outlook individua, infatti, una quota di 1.087 imprese con struttura economica finanziaria abbastanza solida da poter emettere nel 2023 ben 13,1 miliardi di euro di minibond, di cui più della metà “green”: 6,7 miliardi, grazie a 537 possibili emittenti nei settori maggiormente esposti alla transizione ecologica ed energetica. “I dati non correggono ancora l’incremento di rischio che si è verificato durante e dopo il Covid – conferma Fabrizio Negri, Amministratore Delegato di Cerved Rating Agency – anche se la situazione va migliorando rispetto a qualche mese fa: la previsione attuale di 5,8% di rischio percepito (PD) a dicembre 2023 è infatti inferiore al 5,91% a giugno 2023 calcolato a metà dello scorso anno. In termini di dimensione aziendale, le probabilità di default più elevate riguardano le PMI, con stime che arriverebbero al 6,03%, ma a differenza degli anni precedenti l’aumento del rischio interesserebbe anche le grandi aziende, che passerebbero dal 2,9% di fine 2022 al 3,25% di fine 2023. Quanto alla distribuzione sul territorio, il rischio percepito varia molto per area geografica, con previsioni più confortanti al Nord: il dato medio di PD per i prossimi 12 mesi nel Nord-Ovest si ferma al 5,5%, addirittura al 4,8% nel Nord-Est, mentre al Centro arriva fino al 7,08%, al Sud al 7,03% e nelle Isole al 7,6%.Sempre all’interno del Credit Outlook 2023, Cerved Rating Agency ha stimato per il 2023 un mercato potenziale di minibond pari a 13,1 miliardi di euro, per oltre 1000 (1087) possibili imprese emittenti. Miliardi che potrebbero scendere a 11,7 in caso di scenario negativo (indebolimento della congiuntura economica e persistenza di pressioni inflattive trainate dai prezzi energetici e da una politica monetaria sempre più restrittiva), ma che in ogni caso dimostrano la buona solidità della struttura economica finanziaria delle imprese target. Un posto di tutto riguardo occupano poi i mini green bond, che raggiungerebbero i 6,7 miliardi di euro con 537 potenziali imprese emittenti, appartenenti a settori maggiormente esposti alla transizione ecologica ed energetica: costruzioni, automotive, attività manifatturiere, fornitura di energia elettrica, gas e acqua, gestione dei rifiuti, trasporto e magazzinaggio, servizi di informazione e comunicazione, attività immobiliari, agricoltura, siderurgia, chimica, plastica e gomma, produzione di macchinari.

Cerved Credit Management si aggiudica la gara avviata da REV Gestione Crediti S.p.a.

Cerved Credit Management (CCM) si è aggiudicato la gara, avviata a marzo, con cui è stata messa in vendita la piattaforma operativa di REV Gestione Crediti – la società, partecipata al 100% dal Fondo Nazionale di Risoluzione (FNR) istituito presso Bankitalia, nata nel 2015 per trovare una collocazione ai crediti delle quattro banche del Centro Italia poste in risoluzione (Popolare Etruria, Banca Marche, Cassa di Chieti e CariFerrara) – e riceverà l’incarico di gestione degli 8,3 miliardi di crediti NPL residui (dagli iniziali 10) e di prestazione di servizi accessori. “Siamo molto soddisfatti del risultato, perché si tratta di una delle maggiori operazioni in termini di volumi degli ultimi tre anni – commenta Andrea Mignanelli, amministratore delegato di Cerved Group –. Avere ottenuto l’incarico dimostra concretamente al mercato il pieno rilancio di Cerved Credit Management e conferma la centralità di questa divisione nella strategia complessiva del Gruppo. Dal 2017 siamo tra i 4 servicer di REV per una porzione importante del portafoglio e durante questo periodo crediamo di avere operato con prestazioni caratterizzate da performance, trasparenza e spirito di partnership. Abbiamo fortemente creduto in questa operazione e REV ha visto in noi solidità e affidabilità, nonché il know how e la struttura necessari per portare a termine in modo efficace e accurato la gestione del portafoglio residuo e successivamente garantire prospettive di lavoro di medio-lungo periodo alle persone di REV che ora entrano a far parte della nostra squadra”. “C’è grande soddisfazione per questa operazione – afferma Maria Teresa Bianchi, Presidente di Rev Gestione Crediti – dimostra l’apprezzamento del mercato per il buon lavoro svolto in questi anni dalla società ed il valore del suo capitale umano”. Con questa operazione Cerved Credit Management supera i 44 miliardi di euro di crediti deteriorati in gestione e si conferma come operatore leader di mercato con un approccio multispecialistico che spazia su tutto il ciclo di vita del credito e nelle diverse asset class. Nella procedura di gara e nella negoziazione e finalizzazione dei contratti, il Gruppo Cerved è stato assistito dallo studio Gattai, Minoli, Partners, mentre REV è stata assistita dallo Studio Legance – Avvocati Associati e da PWC nella qualità di advisor industriale.

Halo Labs Announces Unexpected Surge in Sales Enters into Commitment Letter for CDN$10 Million Unsecured Credit Line

Toronto, Ontario Halo Labs Inc. (“Halo” or the “Company”) (NEO: HALO, OTCQX: AGEEF, Germany: A9KN) today announces that unexpected surge in sales and the Company has entered into a commitment letter (the “Commitment Letter”) to obtain up to CDN$10 million in unsecured, non-dilutive and non-convertible credit from an arm’s length lender.”January has started off with a bang as a result of unanticipated increased sales of finished goods to dispensary clients. We need capital for raw material, packaging supplies, inventory restocking and general working capital purposes,” stated Kiran Sidhu, Chief Executive Officer of the Company.The financing is comprised of an unsecured non-revolving line of credit for up to CDN$10 million (the “Credit Facility”). The Company will be permitted to draw from the Credit Facility for a period of 12 months from the date of closing. Individual draws under the Credit Facility will bear interest at a rate of 9% per annum and have a maturity date of 18 months from the date of drawdown.

Osservatorio NPE realizzato da CRIBIS Credit Management

E’ la prima edizione della società del Gruppo CRIF specializzata nella gestione in outsourcing dei processi di collection e di NPL management, con l’obiettivo di fornire una visione complessiva e costantemente aggiornata del mercato rispetto al rischio di credito e alla dinamica delle procedure giudiziali.L’analisi dei tassi di default nel periodo compreso tra giugno 2016 e giugno 2020 mostra un andamento decrescente, in misura contenuta per le persone fisiche, più marcato per le persone giuridiche e ancora più pronunciato per le società di capitali. In particolare, nell’ultima rilevazione le persone giuridiche presentano un tasso di default compreso tra 2,5% e 3,5%, mentre per le persone fisiche questo è inferiore al 2%, seppur in crescita sotto la pressione dello shock economico causato dalla pandemia.Considerando l’andamento degli stock di mercato degli NPE tra dicembre 2015 e giugno 2020, si evidenzia un trend decrescente delle posizioni deteriorate, che passa da circa 300 miliardi di € a poco più di 110 miliardi di €, con una riduzione più consistente tra il 2017 e il 2018.Infine, la suddivisione in base alla tipologia di soggetti non finanziari mostra che il 77% dei crediti deteriorati presenti sul mercato a giugno 2020 è imputabile alle Società non Finanziarie (cioè società di capitali, società di persone e società semplici o di fatto con più di 5 addetti), con uno stock in netta contrazione rispetto a dicembre 2015, dovuto principalmente alla riduzione delle sofferenze. Alle Famiglie produttrici (che comprendono imprese individuali e società semplici) è invece imputabile l’8% dello stock di crediti deteriorati rilevato a giugno 2020, mentre alle Famiglie consumatrici è riferibile il rimanente 15% dello stock.

Osservatorio CRIF-Mister Credit sulle frodi creditizie tramite furti d’identità

Lo studio evidenzia che nel 2019 in Italia i casi rilevati siano stati oltre 32.300 per un danno stimato che supera i 150 milioni di Euro. Rispetto all’anno precedente il numero di frodi risulta in ulteriore crescita del +19,7% ma al contempo è diminuito l’importo medio (-5,9%), attestatosi a circa 4.650 Euro, a dimostrazione che le organizzazioni criminali ormai non disdegnano nemmeno le operazioni fraudolente su beni di importo più contenuto. Ma la costante crescita di questo fenomeno criminale non sembra arrestarsi tanto che le elaborazioni relative ai primi 4 mesi del 2020 mostrano un ulteriore incremento nei primi 2 mesi dell’anno (+5%) prima che il lockdown disposto dal Governo attenuasse la dinamica nel successivo bimestre (-12,8%), in virtù della drastica riduzione degli spostamenti delle persone e la temporanea chiusura della quasi totalità degli esercizi commerciali.Tra le forme tecniche di credito in cui si registra il maggior numero di eventi fraudolenti spiccano i prestiti finalizzati all’acquisto di beni e servizi (quali auto, moto, articoli di arredamento, elettronica ed elettrodomestici, energie rinnovabili, ecc), che rappresentano la metà del totale e presentano un importo del ticket medio pari a 5.500 Euro.Infine l’ultimo aggiornamento dell’Osservatorio CRIF – Mister Credit mostra che, ancora una volta, la maggioranza delle vittime sono uomini (61,2% dei casi). Relativamente alla distribuzione per fascia di età, quella in cui si si rileva il maggior numero di casi è quella degli under 30 anni, con il 23,8% del totale. Seguono la classe compresa tra i 41 e 50 anni, con il 23%, e quella tra 31 e 40 anni, con il 21,2%.

New Day Founder Joins UK Fintech Curve to Lead its New Credit Business

Curve, the Over-The-Top banking platform that consolidates multiple cards and accounts into one smart card and app, has appointed Paul Harrald, a founding member of SAV Credit, now New Day, to lead the company’s new Curve Credit Business. Paul joins from Chinese Venture Capital firm CreditEase where he ran UK and European private equity investments and where he first developed a keen interest in Curve. Paul takes up his new role as part of a distinguished career that includes being CIO and Director of Analytics at SAV Credit, now the £1bn alternative credit business New Day, occupying a seat on RBS retail banking boards as well as working as a credit and risk advisor at Google. He was also one of the youngest academics to achieve tenure at Manchester University and has been a visiting Professor in Computer Science at UCL.Curve Credit will allow Curve customers to pay off their credit card debt and to split transactions into instalments, flexibly and simply managed within Curve’s app. Curve’s unique position as an OTT banking platform with read/write access enables customers to make smart decisions based on their spending and credit habits across all their financial products, regardless of where they pay and to whom. Curve Credit will be an alternative to revolving credit and will feature the ability to make full, ad hoc, partial, and regular repayments from a variety of sources. Customers will have complete visibility of payment schedules and amounts outstanding. Although Curve Credit is still in its very early stages, Harrald has big plans for the new product and is preparing to apply for FCA approval.

AM Best Affirms Credit Ratings of Arab Reinsurance Company S.A.L.

AM Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” of Arab Reinsurance Company S.A.L. (Arab Re) (Lebanon). The outlooks of these Credit Ratings (ratings) remain negative.The ratings reflect Arab Re’s balance sheet strength, which AM Best categorises as very strong, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management. The negative outlooks reflect ongoing pressure on the business profile assessment, stemming from AM Best’s concerns over Arab Re’s ability to navigate the challenging underwriting conditions prevailing in its core markets. In addition, the increased social, political and economic instability in Lebanon, where the company is domiciled and writes approximately 10% of its business, have heightened the pressure on the ratings.Arab Re’s balance sheet strength is underpinned by its risk-adjusted capitalisation, which is maintained at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), reflective of low underwriting leverage. The company’s shareholder equity reached USD 104.6 million at year-end 2018, up 1.7% from USD 102.9 million at the end of 2017. The capital base is sufficient to absorb the elevated investment risk arising from exposure to Lebanese assets, notably Lebanon sovereign debt and cash deposits in local banks, and credit risk stemming from unrated retrocessionaires. In response to the heightened economic and political risk in Lebanon, Arab Re has decreased its exposure to domestic securities and increased its proportion of assets held outside Lebanon, notably by redirecting its cash flows to Bahrain and Oman.Arab Re has a track record of marginal operating profitability, with a five-year (2014-2018) weighted average return-on-equity of 4% and return on premium of 8.3%. Whilst operating profit remains supported by good investment returns, the company has experienced weak technical performance in recent years, with ongoing difficult underwriting conditions resulting in a five-year weighted average combined ratio of 107.2%. Net income increased marginally to USD 5.5 million in 2018, due to a slight improvement in technical results and investment income. AM Best expects the cancellation of loss making accounts to improve technical results in the longer term; however, combined ratios are likely to remain above 100% in the short to medium term. Arab Re has a niche position in its core markets in the Middle East and North Africa region, built upon its original role as a reinsurer for the Arab insurance market and longstanding relationships with cedants. Gross written premium increased by approximately 6% to USD 67.9 million in 2018. However, AM Best expects Arab Re’s business profile to remain under pressure in the short to medium term, constrained by challenging market conditions and a lack of growth opportunities in core markets.

AM Best Assigns Credit Ratings to Insurance House P.S.C.

AM Best has assigned a Financial Strength Rating of B+ (Good) and a Long-Term Issuer Credit Rating of “bbb-” to Insurance House P.S.C. (IH) (United Arab Emirates). Outlook assigned to these Credit Ratings (ratings) is stable.The ratings reflect IH’s balance sheet strength, which AM Best categorises as very strong, as well as its adequate operating performance, limited business profile and marginal enterprise risk management (ERM).IH’s balance sheet strength is underpinned by the company’s risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). In addition, the company has a panel of financially strong reinsurers and a good level of liquidity. In 2019, IH was the first company in the UAE to issue perpetual subordinated bonds, increasing its regulatory capital base by AED 15 million (approximately USD 4.1 million) to bring it in line with all local solvency requirements. Offsetting factors include the company’s small overall capital base and material exposure to higher risk asset classes.IH’s historical operating performance has been volatile due to material underwriting losses. However, following a change in senior management in 2016, IH embarked on strategic initiatives to stabilise its operations, adopting stricter underwriting controls and tighter claims management. Successful execution of these remedial measures has supported a reduction in the combined ratio over the past two years to 96.7% in 2018 (2016: 122.5%). As a result, overall earnings also have improved considerably, reaching AED 10.6 million in 2018. Additionally, the company’s investment portfolio continues to contribute positively to the overall profitability, producing an investment yield (including gains) of 2.5% in 2018. Results for the nine months to September 2019 demonstrate continued improvement in the company’s technical and overall profits.IH holds a modest share of the UAE non-life market, writing AED 210.8 million in gross written premiums in 2018. In line with peers operating in the UAE, the company writes predominantly motor and medical insurance business. AM Best expects IH to continue to grow in line with its ambitious business plan, although market conditions remain challenging given the high level of competition.AM Best views IH’s ERM as marginal. In recent months, the company has begun formalising its risk management framework, more closely aligning its controls and procedures to its risk profile. AM Best expects management to make meaningful enhancements to the ERM framework as it continues with its strategic transformation of the company.
AM Best is a global credit rating agency, news publisher and data provider specialising in the insurance industry. The company does business in more than 100 countries. Headquartered in Oldwick, NJ, AM Best has offices in cities around the world, including London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit http://www.ambest.com.

Crédit Agricole Group – ResearchAndMarkets.com

 

The “Enterprise Tech Ecosystem Series: Crédit Agricole Group” report has been added to ResearchAndMarkets.com’s offering.
Crédit Agricole is a provider of banking and related financial services. It offers a range of retail and corporate banking, investment banking, and insurance solutions. Its retail banking portfolio includes savings products, accounts, debit cards, and credit cards, as well as loans for mortgages, students, vehicles, real estate, agriculture, and personal needs. Its corporate banking offering comprises business financing, term deposits, treasury management, cash management, and other services. The bank offers investment banking solutions such as asset management and merger and acquisition advisory. It has a presence across Europe, the Americas, Africa, the Middle East, and Asia. Crédit Agricole operates under various brands such as LCL Bank and Insurance, BforBank, LCL Private Banking, Amundi, CPR Asset Management, Crédit Agricole Assurances, Eurofactor, Sofinco, and Indosuez Wealth Management, among others.This report provides insight into Crédit Agricole Group’s fintech activities, including its digital transformation strategies, its innovation programs, its technology initiatives, its estimated ICT budget, and its major ICT contracts.

AM Best Affirms Credit Ratings of Singapore Reinsurance Corporation Limited

AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Singapore Reinsurance Corporation Limited (Singapore Re) (Singapore). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Singapore Re’s balance sheet strength, which AM Best categorizes as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).Singapore Re’s balance sheet strength assessment is underpinned by risk-adjusted capitalization that remains at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Despite an elevated dividend payout ratio over the past five years, retained earnings have remained sufficient to support new business growth over this period. Other balance sheet factors include the company’s moderate risk investment strategy, and high usage of and dependence on retrocession to manage exposure to catastrophe events, accumulations and large single risks.AM Best views Singapore Re’s operating performance to be adequate, with the company having reported a five-year average return on equity ratio of 4.9% (2014-2018). Underwriting performance has exhibited a level of volatility and increased pressure over recent years driven by continued competitive conditions and increased natural catastrophe activity, with a five-year average combined ratio of 101.1% (2014-2018). The company’s overall earnings remain supported by investment operations, with a five-year average net investment return (including gains/losses) of 3.3%.
AM Best views Singapore Re’s business profile as neutral. The company is a regional non-life reinsurer based in Singapore, with a modest-sized gross written premium base of SGD 208 million (USD 193 million) in 2018. The company remains somewhat reliant on its long-standing relationships with a select number of local cedants, including some shareholders of Singapore Re, which has enabled preferential access to profitable business over a number of years. AM Best views that any deterioration in these relationships over time would likely place pressure on the company’s business profile assessment. AM Best views the company’s ERM approach as appropriate given the current size and complexity of its operations. The company identifies and measures key risks on a frequent basis and manages these risks in conjunction with its Own Risk and Solvency Assessment (ORSA) framework. A partially offsetting factor remains the company’s high level of cedant concentration, largely reflecting the volume of business that emanates from a small number of local cedants with which Singapore Re has long-standing relationships.

AM Best Affirms Credit Ratings of Members of GEICO

AM Best has affirmed the Financial Strength Rating (FSR) of A++ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aaa” for the members of Government Employees Group (GEICO) (Chevy Chase, MD). The ratings of GEICO reflect the group’s balance sheet strength, which AM Best categorizes as strongest, as well as its strong operating performance, very favorable business profile and appropriate enterprise risk management (ERM).The ratings also reflect GEICO’s robust capitalization, consistent track record of operating profitability, brand name recognition and pre-eminent national market position in the personal automobile insurance segment. GEICO’s solid operating results reflect a considerable underwriting expense advantage, driven by its direct distribution business model. In addition, the group continues to produce generally favorable loss experience while benefiting from a steady stream of investment income, and capital gains in its investment portfolio given the favorable performance of equity markets in most years. As a result, GEICO’s substantial capital growth over the most recent five-year period has comfortably supported the steady growth in premiums.
These positive rating factors are offset partially by GEICO’s high investment leverage derived from its significant allocation of invested assets to unaffiliated equities, which could lead to fluctuations in its risk-adjusted capitalization due to market swings or potential stock market downturns. In addition, GEICO maintains a modest geographic concentration that exposes it to legislative changes and judicial decisions, as its top five states account for slightly more than half of its direct premiums written. However, this risk is mitigated largely by GEICO’s geographic spread throughout the United States and management’s proven ability to quickly adapt to changing market conditions. The ratings also reflect GEICO Marine’s supportive risk-adjusted capitalization, historical ocean marine specialty niche expertise and the explicit support provided by NICO, in the form of significant quota share reinsurance coverage, and for which GEICO Marine receives rating enhancement. Additionally, the ratings recognize the implicit commitment provided by Berkshire.

AM Best Withdraws Credit Ratings of AIA New Zealand Limited

AM Best has affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Rating of “aa-” of AIA New Zealand Limited (AIA New Zealand) (New Zealand), formerly known as Sovereign Assurance Company Limited. The outlook of these Credit Ratings (ratings) is stable. Concurrently, AM Best has withdrawn these ratings as the company has requested to no longer participate in AM Best’s interactive rating process.The ratings reflect AIA New Zealand’s balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management. In addition, AIA New Zealand benefits from rating enhancement from its ultimate parent; AIA Group Limited (AIA or the AIA group).
AIA New Zealand’s balance sheet strength is underpinned by its risk-adjusted capitalization, which AM Best expects to remain at the strongest level over the medium term, as measured by Best’s Capital Adequacy Ratio (BCAR). In addition, the company’s local regulatory solvency position in New Zealand is expected to be maintained at an appropriate level, supported by AIA’s capital management strategy and AM Best’s expectation that financial support from the parent will be forthcoming, if required. A partially offsetting balance sheet factor is the company’s increased reinsurance utilization. Since being acquired by the AIA group in 2018, AIA New Zealand has ceded a notable portion of its existing in-force protection portfolio to a third-party reinsurer.The company has a track record of strong operating performance, with a five-year average return-on-equity ratio of 15% (fiscal years 2014 to 2018). AM Best continues to view AIA New Zealand’s business profile as favorable. The company remains the largest life insurer in New Zealand, with its market share (new and in-force business) exceeding 25%. AIA New Zealand also benefits from a 20-year strategic bancassurance partnership that is in place between AIA New Zealand, AIA International Limited (New Zealand Branch) and ASB Bank Limited, a wholly owned subsidiary of the Commonwealth Bank of Australia.AIA New Zealand’s ratings incorporate rating enhancement from AIA, one of the world’s largest life insurance groups. AIA New Zealand is ultimately wholly owned by AIA, and while the subsidiary accounts for a small component of the group’s overall revenues and earnings, it is considered important to the group in terms of accessing the New Zealand life insurance market and its strategic priority of developing long-term bancassurance partnerships.

AM Best Downgrades Credit Ratings of Westminster American Insurance Company

AM Best has downgraded the Financial Strength Rating to A- (Excellent) from A (Excellent) and the Long-Term Issuer Credit Rating to “a-” from “a” of Westminster American Insurance Company (Westminster) (Owings Mills, MD). The outlook of these Credit Ratings (ratings) remains stable.The ratings reflect Westminster’s balance sheet strength, which AM Best categorizes as strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management (ERM).The rating downgrades reflect the significant level of adverse loss reserve development Westminster has reported recently, which has led to a steady decline in the company’s operating performance. The adverse reserve development added 12.3 and 6.9 points, respectively, to the 2017 and 2018 combined ratios. In response, management has taken aggressive actions through a comprehensive claims audit, which has resulted in additional case reserve strengthening, specifically on liability claims, through second-quarter 2019. Going forward, the company has implemented a much more conservative approach when establishing initial loss reserves for all liability claims, which should lessen adverse reserve development. As a result, AM Best anticipates that future operating performance will remain strong as the company continues to grow and expand, but the company will not achieve past levels of performance.The stable outlooks reflect AM Best’s expectation that Westminster will maintain its strong balance sheet strength and operating performance, and that the recent corrective measures taken by management will meaningfully improve the company’s overall ERM effectiveness. Westminster’s overall risk-adjusted capitalization remains supportive of its strong balance sheet strength assessment, and the company continues to maintain a conservative investment portfolio. Although recent adverse reserve development has dampened Westminster’s underwriting profitability, the company has continued to achieve underwriting and pre-tax operating profits, as well as surplus growth.

AM Best Affirms Credit Ratings of New York Life Insurance Company and Its Subsidiaries

AM Best has affirmed the Financial Strength Rating of A++ (Superior) and the Long-Term Issuer Credit Ratings of “aaa” of New York Life Insurance Company and its wholly owned subsidiary, New York Life Insurance and Annuity Corporation (collectively referred to as New York Life). Additionally, AM Best has affirmed the Long-Term Issue Credit Ratings (Long-Term IRs) on the funding agreement-backed securities (FABS) programs, the outstanding notes issued thereunder and the Long-Term IRs on the existing surplus notes of New York Life Insurance Company. The outlook of the Credit Ratings (rating) is stable. All companies are headquartered in New York, NY. (See below for a detailed listing of the Long- and Short-Term IRs.) The ratings reflect New York Life’s balance sheet strength, which AM Best categorizes as strongest, as well as its very strong operating performance, very favorable business profile and very strong overall enterprise risk management.The ratings also reflect New York Life’s risk-adjusted capitalization, which has been sustained at the very strong level, with consistently growing absolute levels of capital, ample financial flexibility and abundant liquidity, even under extreme stress scenarios. Currently, the company’s reserve profile still remains slightly weighted toward annuity products, which are exposed to the continued low interest rate environment. However, this reserve profile is driven partially by the reserving dynamics between life insurance and annuity products, which generate higher reserves for the annuity products in the earlier years. While AM Best believes that New York Life’s investment management capabilities remain strong, the potential still exists for higher-than-normal credit losses, albeit manageable, within New York Life’s general account investment portfolio. The organization’s investment portfolio is considered well-diversified with allocations that follow a consistent, long-term approach, as well as a material allocation to highly rated corporate fixed-income securities. AM Best notes that New York Life has a sizeable allocation to non-traditional assets, namely investments in private equity and hedge funds that together represent approximately 21% of total capital.New York Life’s current adjusted GAAP financial leverage, excluding accumulated other comprehensive income, together with secured and non-recourse debt, continues to be well within AM Best’s guidelines for the company’s current ratings. In addition, GAAP interest coverage is very strong. AM Best also holds a favorable view of New York Life’s proactive management approach to interest-rate risk through ongoing hedging, product design, dynamic asset rebalancing and disciplined sales. Finally, AM Best notes that New York Life has an added measure of financial flexibility in support of its very strong risk-adjusted capital position through the management of its policyholder dividend scale.The consistent and very strong operating performance is attributed to sales growth generated from its traditional ordinary life insurance business, providing long-term cash flows as the foundation. The majority of new annuity sales include market-value adjustment features that reduce interest-rate risk; however, some vulnerability to spread compression exists should the low interest rate environment persist. Overall earnings are derived from diverse sources and have increased primarily because of favorable mortality experience with overall positive business growth. New York Life’s investment operations provide further earnings diversification, reflective of the organization’s strong spread revenue and asset-based fees that are generated from the $572 billion of assets under management as of year-end 2018.

IHS Markit Selected to Deliver Canada’s Federal Carbon Credit and Tracking Solution

IHS Markit (NYSE: INFO), a world leader in critical information, analytics and solutions, today announced it will deliver the Government of Canada’s Carbon Credit and Tracking Solution. The solution will reinforce Canada’s federal measures to mitigate emissions under the Pan-Canadian Framework on Clean Growth and Climate Change, and provide tracking for the federal Output-Based Pricing System. “Canada is committed to reducing its carbon emissions across industries, while creating incentives for firms to embrace clean energy and growth,” said Kathy Benini, managing director and global head of Environmental Solutions at IHS Markit. “By leveraging our experience and knowledge in designing and delivering national and international registries, Canada will have a best-in-class solution for the federal carbon pricing backstop.”The federal Output-Based Pricing System is designed to ensure there is a price incentive for industrial emitters to reduce emissions, spur innovation, maintain competitiveness and eliminate carbon leakage. Using the infrastructure provided by IHS Markit, Canada will be able to support these objectives.IHS Markit has designed and developed greenhouse gas registries and auction infrastructure for governments in the Americas, EMEA and APAC. Its Environmental Registry is the largest global registry for carbon, water and biodiversity credits. Since its inception, the Environmental Registry has provided full tracking for the lifecycle of more than 350 million credits.

AM Best Affirms Credit Ratings of Lloyd’s

AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a+” of Lloyd’s (United Kingdom), Lloyd’s Insurance Company (China) Limited (Lloyd’s China) (China) and Lloyd’s Insurance Company S.A. (Lloyd’s Brussels) (Belgium). Concurrently, AM Best has affirmed the Long-Term ICR of “a” of Society of Lloyd’s (the Society) (United Kingdom) and the Long-Term Issue Credit Ratings of “a-” on the GBP 500 million 4.750% subordinated loan notes maturing 30 October 2024 and on the GBP 300 million 4.875% subordinated notes maturing 7 February 2047. The outlooks of these Credit Ratings (ratings) remains stable.The ratings reflect Lloyd’s balance sheet strength, which AM Best categorises as very strong, as well as its strong operating performance, favourable business profile and appropriate enterprise risk management.The Lloyd’s market benefits from its risk-adjusted capitalisation being at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Capital adequacy is supported by a robust risk-based approach to setting member-level capital and a strong Central Fund, which is available to meet the policyholder obligations of all Lloyd’s members. AM Best’s assessment of the balance sheet strength of Lloyd’s takes into account the fungibility constraints of capital held at the member level and the market’s good financial flexibility, which is enhanced by the diversity of its capital providers.
The favourable business profile assessment reflects the strong position of Lloyd’s in its core markets, as a leading writer of reinsurance and specialty property and casualty insurance. Lloyd’s has an excellent brand in these markets but an increasingly difficult operating environment poses challenges to Lloyd’s competitive position. The market’s business mix is well-diversified but with some geographical bias toward North America and product bias towards moderate to high-risk commercial specialty lines products.
The ratings of Lloyd’s China and Lloyd’s Brussels reflect reinsurance support from Lloyd’s in the form of quota share contracts between Lloyd’s and the syndicates participating on the China and Brussels platforms.The rating of the Society is notched from the rating of the Lloyd’s market, reflecting the unique relationship between the Society and the Lloyd’s market, which means that the ability of the Society to meet its obligations is inextricably linked to the ability of Lloyd’s to meet its obligations.

Stable credit market as property companies’ shares reach new high

In the July issue of CREDI, the Main index increases from 50.3 to 50.8 indicating a slightly improved credit market. Property companies maintain a positive view of the credit market, while banks are increasingly pessimistic about the future.“This year’s second CREDI survey reflects a stable credit market, where improved access to credit and extended credit durations counteract expectations of higher credit margins. The CREDI Main index is boosted in particular by an improved perception of the current situation among banks. However, banks are increasingly pessimistic going forward as their Expectations index falls to its second-lowest point in the history of CREDI. Furthermore, the average interest rate of listed property companies increased slightly to 2.0 per cent, marking the end of the trend of decreasing interest rates that lasted for 21 quarters,” says Martin Malhotra, Project Manager at Catella.“The equity market has rebound strongly this year, with the total return of the Stockholm OMX 30 index being nearly 20 per cent. The main driver has been the U-turns of the major central banks and the expectation that we will see lower interest rates and more quantitative easing from the central banks going forward. The Swedish equity market is a reasonably good leading indicator of the CREDI Main index, and its development suggests that we will see stable credit sentiments during the coming quarters,” says Arvid Lindqvist, Head of Research at Catella.“The reduction in long-term interest rates has also been reflected in property companies’ preference shares, where the average dividend has fallen to 6.1 per cent since the turn of the year. Also, as the volume-growth of outstanding bonds continues to slow down, the bond market’s share of the listed property companies’ debt has remained at 28 per cent,” Martin Malhotra concludes.The Catella Real Estate Debt Indicator (CREDI) is attached and can also be downloaded from catella.com/en/news-and-pressreleases/research. CREDI consists of two parts: one is an index based on a survey of listed property companies and active banks, and the other a set of indices and analyses based on publicly available data.

Global Credit Specialist CIFC Completes Initial UK Research Team Hires

Global credit specialist CIFC, which launched a European office in London last year, has completed the first phase of its UK research team recruitment with the appointment of its fourth analyst.Senior Analyst Rinse Terpstra has joined from Chenavari Investment Managers where he worked as a senior investment analyst focusing on CLOs. He has more than 12 years of leveraged loan and high yield credit experience in Western and Central Eastern Europe as well as Turkey.Analyst Zoltan Paller has joined from UBS where he focused on leveraged finance and direct lending opportunities in the EMEA region. Prior to UBS, he held positions in the Corporate Credit team of Morgan Stanley in Budapest and Fitch in London.
Analyst Max Elliott-Taylor has joined from Investcorp Credit Management in London where he was an associate in the credit research team investing in leveraged loans and high yield bonds for five years.Analyst Alessandro Garello Cantoni has joined from Bank of America Merrill Lynch where he worked for five years focusing on Italian and Iberian markets and later leveraged finance origination in the EMEA region.Their hires follow the recruitment last year of Managing Directors Joshua Hughes and Dan Robinson to open the London office and start building out the team.

AM Best Affirms Credit Ratings for La Colonial, S.A. Compañía de Seguros

AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb+” of La Colonial, S.A. Compañía de Seguros (La Colonial) (Santo Domingo, Dominican Republic). The outlook of these Credit Ratings (ratings) remains positive.The ratings reflect La Colonial’s balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.The positive outlooks recognize the improvements made by La Colonial in terms of operating performance and acknowledge the skills of the underwriting team to face the potential challenges of harsher competition during 2019. The ratings also reflect the company’s robust risk-adjusted capitalization, supported by a strong reinsurance program. Partially offsetting these positive rating factors is the competitive environment in the Dominican Republic.La Colonial is the fifth-largest insurance company in the Dominican Republic, with a 7.3% market share as of April 2019, maintaining a leading position in the Dominican Republic despite changing market dynamics, including the continuous inflow of new health premiums to the system from new competitors. The company has posted adequate profitability and growth to support its results. The company operates as a multiline insurer, and its portfolio is composed of 80% property/casualty, 16% accidents and health and 4% life, based on gross written premium.In 2018, the company continued its improved combined ratio to levels below 100% because of higher retention and a continuation of expense efficiency. A key year for the resolution of the positive outlooks is 2019, as the company needs to consolidate the improvements achieved in terms of operating performance amidst increased competition in key segments like auto and fire. In this regard, AM Best considers La Colonial’s management team to be well-prepared to manage such competition and to maintain a cost-efficient operation.
La Colonial’s risk-adjusted capitalization remains strong and is supported adequately by a comprehensive reinsurance program that mitigates the potential impact from regional natural disasters on the company’s results. These characteristics are well-reflected in its solvency and capitalization metrics, and its excellent market position. Looking forward, AM Best expects the company to continue performing with premium sufficiency driven by lower technical costs in the medium term, to achieve higher ratings.Positive rating actions could occur if La Colonial continues to improve its underwriting performance, by achieving greater efficiency and consolidating its positive trend in operating performance, while at the same time, strengthening its capital base through increased profitability. Factors that might lead to negative rating actions include deterioration of its technical income, by either higher operational costs or a decline in the underwriting quality that places more emphasis on financial income to sustain profitability. Any major changes in La Colonial’s capital base, including significant dividends or capital outflows, that diminish AM Best’s view of the company’s risk-adjusted capitalization also could result in negative rating actions.