|Insurer Financial Strength||BBB+||Positive outlook|
|Long-term Issuer Default Rating||BBB||Positive outlook|
|Subordinated Debt Rating||BB+||Positive outlook|
Last review 12 June 2018
Last key dates
Last full report
In its last full year report dated July 2018, 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 :
Improving Credit Profile: The ratings reflect Ethias’s strong capital position, good profitability and sound business profile in Belgium. These strengths are counterbalanced by a moderate, albeit reducing, exposure to interest-rate risk, and the reliance that parent company Vitrufin places on Ethias for funding, through dividends, the payment of interest and principal on its EUR278 million debt maturing in January 2019.
"Parent Loan Repayment Likely: Ethias paid EUR150 million dividends to Vitrufin in May 2018 related to its 2017 net income and plans to pay another EUR118 million in 2H18 as an interim dividend on its 2Q18 (or 3Q18) earnings. Fitch understands that Vitrufin is bound by the terms of the loan agreement to allocate Ethias’s dividends in priority to repay the loan."
" ‘First A’ Disposal Credit Positive: Ethias has been running down its capital-intensive First A retail life reserves since 2010. Ethias announced the sale of its remaining First A portfolio (EUR189 million) in April 2018. The sale which was accounted for in 2017 has a positive effect on Ethias’s risk-adjusted capital profile and duration gap."
"Strong Capitalisation: Fitch expects Ethias’s capitalisation to benefit from the normalisation of its dividend policy due to earnings retention from 2019. The volatility of its capital position has diminished via a reduction in the company’s interest-rate risk exposure. At end-2017, Ethias’s Solvency II (S2) margin, which excludes transitional arrangements and dividends, improved to 205% from 146% at end-2016. It has a ‘Very Strong’ score under Fitch’s Prism Factor-Based Capital Model (Prism FBM) at end-2017, after deduction of the EUR268 million dividends."
"Good Profitability: Ethias’s underwriting performance is driven by the non-life business, whose profitability remains strong as demonstrated by a reported net IFRS combined ratio of 87.7% at end-2017. Fitch expects earnings in 2018 to be less affected by non-recurring items and be more reflective of consistent technical results."
"Reduced Duration Gap: Ethias has significantly reduced its exposure to interest-rate risk, resulting from historically high minimum guaranteed returns on life technical liabilities. Fitch views Ethias’s investment policy as prudent. The overall risk profile of the investment portfolio remains a rating strength."
Fitch, July, 2018
The evolution of the rating of Ethias SA is the following:
|Date||Insurer Financiel Strength (IFS)||Insurer Default Rating (IDR)||Outlooks|
|12/09/2016||BBB placed on RWP||BBB- placed on RWP|
The rating of subordinated debts is the following:
|Issue date||Program||ISIN Code||Rating|
EUR 170.8M tap issue of dated subordinated notes due 2026
|14/07/2015||EUR 231.9M fixed rate dated subordinated notes due 2026||BE6279619330||BB+|
EUR 14M fixed/floating rate subordinated undated bonds
Fitch press releases & annual reports: