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Rating Action:

Moody's upgrades all Argentine insurers and reciprocal guarantors following upgrade of sovereign rating

 The document has been translated in other languages

04 Dec 2017

Buenos Aires City, December 04, 2017 -- Moody's Latin America Agente de Calificación de Riesgo ("Moody's") upgraded the global local currency (GLC) and national scale (NS) insurance financial strength (IFS) ratings of 9 insurers and all 6 reciprocal guarantors in Argentina. In the same rating action, Moody's upgraded the GLC IFS rating of 4 insurers, and affirmed their national scale (NS) IFS ratings. The rating outlook of all 19 entities are now stable.

This portfolio-wide rating action on the Argentine insurers and reciprocal guarantors follows Moody's Investors Service's recently announced upgrade of Argentina's local-currency and foreign-currency sovereign bond ratings to B2/stable from B3/positive, and the concurrent raising of Argentina's long-term local currency bond and deposit ceilings to Ba2 from Ba3 on 29 November 2017 (see press release titled " Moody's Upgrades Argentina's Rating to B2; Outlook Stable ").

RATINGS RATIONALE

Moody's said that the rating upgrade for all 13 insurers and 6 reciprocal guarantors reflects a combination of the beneficial impact of the sovereign upgrade on multiple aspects of their financial profiles, including asset quality, capital adequacy and financial flexibility, as well as their meaningful sensitivity to sovereign and systemic risk. Given the entities' high sovereign investment exposure and the close linkages between their credit profiles and the sovereign, the country's sovereign rating upgrade benefitted the companies' financial fundamentals. Moreover, the upgrade of these entities also reflects the improvement in Argentina's Institutional Strength, which resulted in a better assessment of the country's insurance operating environment.

In the case of the 4 insurers whose ratings were upgraded to Ba2, the upgrade also importantly considered the raising of Argentina's local currency bond country ceiling to that level, as their ratings would otherwise be constrained by the previous Ba3 ceiling.

The GLC and NS IFS ratings of the following 9 insurers and all 6 reciprocal guarantors have been upgraded. Their GLC IFS rating outlooks have been changed to stable from positive, whereas their NS IFS rating outlooks remain stable:

- Caja de Seguros S.A.: GLC IFS rating upgraded to Ba3 from B1. NS IFS rating upgraded to Aaa.ar from Aa1.ar

- Fianzas y Credito S.A. Cia. de Seguros: GLC IFS rating upgraded to B2 from B3. NS IFS rating upgraded to A2.ar from Baa2.ar

- La Segunda ART: GLC IFS rating upgraded to B1 from B2. NS IFS rating upgraded to Aa2.ar from A1.ar

- La Segunda Compañía de Personas S.A.: GLC IFS rating upgraded to B1 from B2. NS IFS rating upgraded to Aa2.ar from A1.ar

- La Segunda Coop. Ltda. Seguros: GLC IFS rating upgraded to B1 from B2. NS IFS rating upgraded to Aa2.ar from A1.ar

- Origenes Seguros S.A.: GLC IFS rating upgraded to B1 from B2. NS IFS rating upgraded to Aa3.ar from A2.ar

- San Cristóbal Seguros Generales: GLC IFS rating upgraded to B1 from B2. NS IFS rating upgraded to Aa2.ar from A1.ar

- Seguros Sura S.A. (Argentina): GLC IFS rating upgraded to Ba3 from B1. NS IFS rating upgraded to Aa1.ar from Aa2.ar

- Provincia Seguros: GLC IFS rating upgraded to B2 from B3. NS IFS rating upgraded to A1.ar from Baa1.ar

- Affidavit S.G.R.: GLC IFS rating upgraded to B2 from B3. NS IFS rating upgraded to A2.ar from Baa2.ar

- Aval Rural S.G.R.: GLC IFS rating upgraded to B1 from B2. NS IFS rating upgraded to Aa3.ar from A2.ar

- Fondo de Garantías del Chaco (FOGACH): GLC IFS rating upgraded to B2 from B3. NS IFS rating upgraded to A3.ar from Baa3.ar

- Garantía de Valores SGR: GLC IFS rating upgraded to B1 from B2. NS IFS rating upgraded to Aa3.ar from A2.ar

- Integra Pymes S.G.R.: GLC IFS rating upgraded to B2 from B3. NS IFS rating upgraded to A3.ar from Baa3.ar

- Vínculos SGR: GLC IFS rating upgraded to B2 from B3. NS IFS rating upgraded to A3.ar from Baa3.ar

Moody's went on to say that the GLC IFS rating upgrade for other two insurers also considers the raising of Argentina's local currency bond country ceiling to Ba2 from Ba3, as their ratings would otherwise be constrained by the previous Ba3 ceiling. The GLC IFS ratings of the following two insurers have been upgraded, whereas their NS IFS ratings have been affirmed. Their GLC and NS IFS rating outlooks remain stable:

- Chubb Seguros Argentina S.A.: GLC IFS rating upgraded to Ba2 from Ba3. NS IFS rating affirmed at Aaa.ar

- QBE Seguros La Buenos Aires S.A.: GLC IFS rating upgraded to Ba2 from Ba3. NS IFS rating affirmed at Aaa.ar

In addition to improved sovereign conditions and the raising of Argentina's country ceiling, the rating agency said that the GLC IFS rating upgrade for other two insurers also significantly reflects the improvement in the country's insurance operating environment, without which the current rating upgrade would have been unlikely. The GLC IFS rating of the following two insurers have been upgraded, whereas their NS IFS ratings have been affirmed. Their GLC and NS IFS rating outlooks remain stable:

- ALLIANZ Argentina Compañía de Seguros S.A.: GLC IFS rating upgraded to Ba2 from Ba3. NS IFS rating affirmed at Aaa.ar

- BBVA Consolidar Seguros: GLC IFS rating upgraded to Ba2 from Ba3. NS IFS rating affirmed at Aaa.ar

In addition to company-specific rating drivers, the GLC IFS ratings of Argentina's insurers and reciprocal guarantors could be upgraded if the Argentine sovereign rating is upgraded further and/or if the country's insurance operating environment improves. Conversely, a deterioration in Argentina's sovereign rating and/or insurance operating environment could result in a downgrade of the companies' ratings.

The principal methodology used in rating Affidavit S.G.R., ALLIANZ Argentina Compania de Seguros S.A., Aval Rural S.G.R., BBVA Consolidar Seguros, Caja de Seguros S.A., Chubb Seguros Argentina S.A., Fianzas y Credito S.A. Cia. de Seguros, Fondo de Garantias del Chaco (FOGACH), Garantia de Valores SGR, Integra Pymes S.G.R., 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), and Vinculos SGR was Global Property and Casualty Insurers published in May 2017. The principal methodology used in rating La Segunda Compania de Personas S.A. and Origenes Seguros S.A. was Global Life Insurers published in April 2016. 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 https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1060333.

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 - Senior Credit Officer
Financial Institutions Group
Moody's Latin America ACR
Ing. Butty 240
16th Floor
Buenos Aires City C1001AFB
Argentina
JOURNALISTS: 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: 800 666 3506
Client Service: 1 212 553 1653

No Related Data.
© 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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