Investors ratings

Overview

Insurer Financial Strength	A	Positive outlook
Long-term Issuer Default Rating	A-	Positive outlook
Subordinated Debt Rating	BBB

Last review June 3h 2021

Last key dates

On June 3th 2021, Fitch Ratings has upgraded Ethias SA's (Ethias) Insurer Financial Strength (IFS) Rating to 'A' from 'A-' and Ethias' Issuer Default Rating (IDR) to 'A-' from 'BBB+'. The Outlooks are Positive. The upgrade reflects Fitch's view that Ethias has consolidated its very strong capitalisation, its low leverage and strong operating performance since it completed a multi-year action plan in 2018. The ratings actions also consider the resilience of these factors during the coronavirus pandemic. Ethias' ratings also reflect a strong business profile.

The Positive Outlook reflects Fitch's view that the group could achieve a combined ratio sustainably below 95%, while maintaining its very strong capitalisation and low leverage over the next 12 to 24 months.
On May 19th 2020, Fitch Ratings affirmed Ethias's Insurer Financial Strength (IFS) Rating at 'A-' with a stable outlook. The rating actions are based on Fitch’s current assessment of the impact of the Coronavirus pandemic. The ratings primarily reflect Ethias's strong capitalization and leverage, good profitability and strong business profile. Fitch continues to view Ethias as strongly capitalized for its current rating, with financial capital ratios marginally weaker than those reported in 2019 results. The Fitch rating case analysis suggests manageable Covid-19 related claims and Fitch underlines that Ethias has a strong balance sheet liquidity position.
In March 2020, after examining the macroeconomic situation and the prospects for many companies in the wake of the Covid-19 health crisis, within the framework of its "event driven" rating committee, the agency took the decision to bring the ratings of a whole series of companies with a positive outlook to a stable outlook. In this context, the outlook of Ethias' "A-” rating therefore goes from positive to stable.
On the 13 of august 2019, Fitch has revised Ethias’ Outlook to Positive from Stable. The Positive Outlook reflects Fitch's expectation that the company will maintain its strong capitalisation and financial leverage ratio (FLR) in 2019. The group has begun to build a track record of stability following the completion of a multi-year action plan that has resulted in a strengthening in capitalisation, financial flexibility and asset-and-liability risk management.
On the 22nd of January 2019, Fitch has upgraded Ethias S.A.'s Insurer Financial Strength (IFS) rating to A- from BBB+. The upgrade follows the full repayment of Vitrufin's debt on 16 January 2019 and the full disposal of Ethias's capital-intensive individual life portfolio in september 2018. In Fitch's view, these two achievements mark the completion of a multi-year action plan that has resulted in a strengthening in capitalisation, financial flexibility and asset and liability management risk.
On the 12th of June 2018, Fitch has revised Ethias’ Outlook to Positive from Stable while affirming the Insurer Financial Strength (IFS) rating at BBB+ in order to reflects Fitch's view that the likely full repayment of Vitrufin debt and the full disposal of the insurer's capital-intensive individual life portfolio will lead to a strengthening in Ethias's capitalisation, profitability and financial flexibility.

On the 27th of June 2017, Fitch has upgraded Ethias’ Insurer Financial Strength (IFS) rating to BBB+ from BBB with stable outlook, in order to reflect the completion of Ethias’s recovery plan in May 2017 and resulting strengthening of capital profile and reduced exposure to interest rate risk.

On the 10th of January 2017, Fitch affirmed Ethias' Insurer Financial Strength rating at BBB with positive outlook, in order to reflect the success of the Switch VI operation that enables the company to improve its capital position and to reduce its sensitivity to interest rate changes.

***

Last full report

In its last full year report dated October 2020, Fitch recognizes the strong level of capitalisation of Ethias, its good profitability and the reduction of its duration gap.

Selected extracts from Key Rating Drivers :

“The positive outlook reflects Fitch’s expectation that the company will maintain its strong capitalization.”

“The group has begun to build a track record of stability following the completion of a multi-year action plan that has resulted in a strengthening in capitalization, financial flexibility and asset and liability risk management ”

“The ratings primarily reflect Ethias's strong capitalisation and leverage, good profitability and strong business profile.”

“Ethias’sPrism FBM score was at the upper end of the 'Very Strong' category at end 2018, well in excess of the ‘A’ benchmark.”

“Ethias’s FLR was stable at approximately 20% at end 2018.”

“Ethias reported a Solvency II capital ratio of 181% at end 2018, excluding transitional arrangements (end 2017 : 183%).”

“Fitch regards Ethias's profitability as good, driven by the non-life business. Net income return on equity (ROE) was 7.7% at end 2018 (2017: 6.7%). We expect Ethias to demonstrate sustained profitability in 2019 that would be more reflective of technical results, after having been affected by non recurring items related to the company’s restructuring”.

“Ethias has significantly reduced its exposure to interest rate risks resulting from historically high minimum guaranteed returns on retail life technical liabilities. The duration gap is now expected to remain below 1 year.”

RATING SENSITIVITIES

“The ratings could be upgraded if Ethias maintains a ‘very strong’ Prism FBM score and a stable FLR, while return on equity remains stable”.

Fitch, August 2019

***

The evolution of the rating of Ethias SA is the following:

Date	Insurer Financiel Strength (IFS)	Insurer Default Rating (IDR)	Outlooks
03/06/2021	A	A-	Positive outlook
19/05/2020	A-	BBB+	Stable outlook
19/03/2020	A-	BBB+	Stable outlook
13/08/2019	A-	BBB+	Positive outlook
22/01/2019	A-	BBB+	Stable outlook
12/06/2018	BBB+	BBB	Positive outlook
27/06/2017	BBB+	BBB	Stable outlook
10/01/2017	BBB	BBB-	Positive outlook

The rating of subordinated debts is the following:

Issue date	Program	ISIN Code	Rating
05/11/2015	EUR 170.8M tap issue of dated subordinated notes due 2026	BE6279619330	BBB
14/07/2015	EUR 231.9M fixed rate dated subordinated notes due 2026	BE6279619330	BBB
20/12/2015	EUR 14M fixed/floating rate subordinated undated bonds	BE0930906947	BBB