A.M. Best Europe – Rating Services Limited has affirmed the
financial strength rating of A- (Excellent) and issuer credit rating of
“a-” of PrismaLife AG (PrismaLife) (Liechtenstein). The outlook
for both ratings remains stable.
The ratings of PrismaLife reflect its strong risk-adjusted
capitalisation, good earnings and niche business position as a
specialist unit-linked insurer.
A.M. Best believes that PrismaLife’s risk-adjusted capitalisation will
remain strong prospectively, despite some anticipated business growth in
the next two to three years. Risk-adjusted capitalisation is supported
by the limited guarantees on the products the company markets, which
restricts capital strain. Dividend payments are expected to be low in
2012 and 2013. PrismaLife’s relatively high financial leverage is
progressively reducing as a result of higher capital build up and
partial debt redemption. The company’s financial leverage remains within
the tolerance levels for its ratings.
PrismaLife’s underlying margins are good and supported by low
administration expenses resulting from its efficient organisational
structure. Pre-tax earnings deteriorated by 24% to EUR 4.4 million in
2011 due to the impact of volatile investment income and higher claims.
A.M. Best believes that PrismaLife’s overall earnings before taxes are
likely to remain relatively stable at EUR 4-5 million in 2012.
Prospectively, A.M. Best expects the impact of new business strain on
earnings to continue to diminish while policies written in the early
years of PrismaLife’s operations generate increased profits. However,
this is likely to be partially offset by higher surrenders and lapses
due to the ongoing difficult economic environment.
PrismaLife’s gross written premiums are expected to increase to EUR 230
million by 2013, supported by its increasingly diversified distribution
network. PrismaLife continues to have a good niche business position as
a unit-linked life insurer benefiting from flexible and innovative
products. In line with the rest of the German life market, PrismaLife’s
premium income has been constrained in the last three years by a
challenging economic environment. However, in 2011, its premiums
increased 11% to EUR 199 million. Regular business, which has been more
profitable historically, continued to develop well and accounted for 80%
of total premiums by year-end 2011.
Positive rating actions are unlikely at this time.
Negative rating actions could occur as a result of a significant
deterioration in the risk-adjusted capitalisation and performance of
The methodology used in determining these ratings is Best’s Credit
Rating Methodology, which provides a
comprehensive explanation of A.M. Best’s rating process and contains the
different rating criteria employed in the rating process. Key criteria
utilised include: “Risk Management and the Rating Process for Insurance
Companies”; “Understanding BCAR for Life/Health Insurers”; and “Equity
Credit for Hybrid Securities”. Best’s Credit Rating Methodology can be
found at www.ambest.com/ratings/methodology.
In accordance with Regulation (EC) No. 1060/2009, the following is a
link to required disclosures: A.M.
Best Europe - Rating Services Limited Supplementary Disclosure.
A.M. Best Europe – Rating Services Limited is a subsidiary of A.M.
Best Company.Founded in 1899, A.M. Best Company is the world’s
oldest and most authoritative insurance rating and information source.
For more information, visit www.ambest.com.
Copyright © 2012 by A.M. Best Company, Inc.ALL RIGHTS
A.M. BestCharlotte VigierSenior Financial
Analyst+(44) 20 7626 firstname.lastname@example.orgRachelle
MorrowSenior Manager, Public Relations+(1) 908
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DobbynAssociate Director+(44) 20 7626 firstname.lastname@example.orgJim
PeavyAssistant Vice President, Public Relations+(1)
908 439 2200, ext. email@example.com
Source: A.M. Best Europe