Standard & Poor's (S&P) has raised the long term counterparty credit and insurer financial strength ratings for Allianz Ireland and Allianz Corporate Ireland, known collectively as Allianz Ireland, from BBB- to BBB.
The outlook for both subsidiaries remains stable, it said.
S&P said the upgrade reflects strong improvements in Allianz Ireland's operating performance, capitalisation, and overall financial profile in terms of liquidity and financial flexibility.
It said the improvement has been aided by structural changes in the Irish insurance market, including legislative reforms.
This change will continue to see a reduction in both frequency and severity of claims and is viewed by S&P as positive and sustainable.
But it warned that the initial uncertainties arising from the structural change make adequate pricing of risk difficult to determine and Allianz Ireland therefore faces the challenge of maintaining profitability across the cycle, particularly if price competition increases.
“The ratings also reflect the companies' good operating performance, good level of capitalization supported by conservative reserving practices and investment strategy, and good competitive position in the Irish and Northern Irish markets,” said S&P credit analyst Tatiana Grineva.
The ratings do not include credit for implied group support from the companies' ultimate parent, Allianz AG
“The stable outlook reflects S&P's expectation that Allianz Ireland will maintain a good operating performance and achieve a stronger level of capitalization,” added Grineva.
