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Rating Action:

Moody´s changes outlook to negative on Argentine insurers and financial guarantors; affirms ratings

 The document has been translated in other languages

16 July 2019

Buenos Aires City , July 16, 2019 – Moody's Latin America Agente de Calificación de Riesgo S.A. ("Moody's"), affirmed the global local currency (GLC) and national scale (NS) insurance financial strength (IFS) ratings of 13 insurers and 6 financial guarantors in Argentina. The outlook of the 19 entities' GLC IFS ratings was changed to negative from stable, whereas the outlook of their corresponding NS IFS ratings remains stable. Please see a complete list of companies with their ratings and outlooks below.

This portfolio-wide rating action on the Argentine insurers follows Moody's Investors Service's outlook change to negative from stable on Argentina's B2 sovereign bond ratings (see press release dated 12 July 2019, titled "Moody's changes Argentina's outlook to negative from stable; affirms B2 ratings").

RATINGS RATIONALE

Moody's said that the negative outlook on the 19 entities' GLC IFS ratings considers that a potential downgrade of the Argentine sovereign rating would exert downward pressure on the companies' credit profiles -and consequently rating downgrades- reflecting Moody's assessment of a high correlation between their credit profiles and that of the sovereign. Such correlation takes into account the degree to which the companies' businesses depend on the domestic macroeconomic and financial environment -exacerbated by their lack of cross border diversification-; and their direct and indirect exposures to the sovereign, which weighs on their asset quality, capital adequacy and financial flexibility profiles.

Moody's went on to say that all the companies' NS IFS rating outlooks remain stable, because their creditworthiness relative to other Argentine issuers will likely remain unchanged in the event of a sovereign bond rating downgrade.

The following 19 entities' GLC/NSR IFS ratings have been affirmed. The outlooks of their GLC IFS ratings were changed to negative from stable, whereas the outlooks of their NS IFS ratings remain stable:

Insurers:

-Allianz Argentina Compania de Seguros S.A.: Ba2/Aaa.ar

-BBVA Consolidar Seguros: Ba2/Aaa.ar

-Caja de Seguros S.A.: Ba3/Aaa.ar

-Chubb Seguros Argentina S.A.: Ba2/Aaa.ar

-Fianzas y Credito S.A. Cia. de Seguros: B2/A2.ar

-La Segunda ART: B1/Aa2.ar

-La Segunda Compania de Personas S.A.: B1/Aa2.ar

-La Segunda Coop. Ltda Seguros: B1/Aa2.ar

-Origenes Seguros S.A.: B1/Aa3.ar

-Provincia Seguros: B2/A1.ar

-QBE Seguros La Buenos Aires S.A.: Ba2/Aaa.ar

-San Cristóbal Seguros Generales: B1/Aa2.ar

-Seguros Sura S.A. (Argentina): Ba3/Aa1.ar

Financial guarantors:

-Affidavit S.G.R.: B2/A2.ar

-Aval Rural S.G.R.: B1/Aa3.ar

-Fondo de Garantías del Chaco (FOGACH): B2/A3.ar

-Garantías BIND SGR: B1/Aa3.ar

-Integra Pymes S.G.R.: B2/A3.ar

-Vínculos SGR: B2/A3.ar

Among the factors that could lead to a rating downgrade for the 13 insurers and 6 financial guarantors with negative outlooks are: 1) a downgrade of the Argentine sovereign bond rating, 2) deterioration in the country's operating environment, and 3) deterioration in companies' asset quality, profitability or in their capital adequacy. Given the negative outlook on the companies' GLC IFS ratings, a rating upgrade is unlikely. That said, the following factors may prompt an outlook change back to stable: 1) a change of Argentina's sovereign outlook back to stable from negative, 2) an improvement in the country's insurance operating environment, and 3) an improvement in companies' asset quality, profitability or in their capital adequacy.

The principal methodology used in rating ALLIANZ Argentina Compania de Seguros S.A., BBVA Consolidar Seguros, Caja de Seguros S.A., Chubb Seguros Argentina S.A., Fianzas y Credito S.A. Cia. de Seguros, La Segunda ART, La Segunda Coop. Ltda Seguros, Provincia Seguros, QBE Seguros La Buenos Aires S.A., San Cristobal Seguros Generales, Seguros Sura S.A. (Argentina), La Segunda Compania de Personas S.A. and Origenes Seguros S.A. was Procedures Manual for Insurance Companies published in January 2017. The principal methodology used in rating Affidavit S.G.R., Aval Rural S.G.R., Fondo de Garantias del Chaco (FOGACH), Garantias BIND SGR, Integra Pymes S.G.R., and Vinculos SGR was Procedures Manual for the Rating of Guarantor Entities published in January 2017. Please see the Rating Methodologies page on www.moodys.com.ar for a copy of these methodologies.

Moody's National Scale Credit Ratings (NSRs) are intended as relative measures of creditworthiness among debt issues and issuers within a country, enabling market participants to better differentiate relative risks. NSRs differ from Moody's global scale credit ratings in that they are not globally comparable with the full universe of Moody's rated entities, but only with NSRs for other rated debt issues and issuers within the same country. NSRs are designated by a ".nn" country modifier signifying the relevant country, as in ".za" for South Africa. For further information on Moody's approach to national scale credit ratings, please refer to Moody's Credit rating Methodology published in May 2016 entitled "Mapping National Scale Ratings from Global Scale Ratings". While NSRs have no inherent absolute meaning in terms of default risk or expected loss, a historical probability of default consistent with a given NSR can be inferred from the GSR to which it maps back at that particular point in time. For information on the historical default rates associated with different global scale rating categories over different investment horizons, please see http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1174796 .

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.ar.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

For issuers domiciled in Argentina, the regulatory report related to this rating action is available on www.moodys.com.ar.

The below contact information is provided for information purposes only. Please see the ratings tab of the issuer page at www.moodys.com.ar, for each of the ratings covered, Moody's disclosures on the lead rating analyst and the Moody's legal entity that has issued the ratings.

Please see www.moodys.com.ar for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com.ar for additional regulatory disclosures for each credit rating.

Diego Nemirovsky
VP-Sr Credit Officer
Financial Institutions Group
Moody's Latin America ACR
Ing. Butty 240
16th Floor
Buenos Aires City
Argentina
JOURNALISTS : 1 800 666 3506
Client Service : 1 212 553 1653

Marc R. Pinto, CFA
MD-Financial Institutions
Financial Institutions Group
JOURNALISTS : 1 212 553 0376
Client Service : 1 212 553 1653

Releasing Office :
Moody's Latin America ACR
Ing. Butty 240
16th Floor
Buenos Aires City, C1001AFB
Argentina
JOURNALISTS : 1 800 666 3506
Client Service : 1 212 553 1653

© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

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Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody’s Investors Service, Inc. for ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

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MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

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