Fitch Ratings-London-10 June 2014: Fitch Ratings says it is evaluating the strategic importance of Milleniumbcp-Ageas’s operating entities (MBCPA; Insurer Financial Strength (IFS) rating BBB-/Positive) to Ageas Insurance International NV (Ageas; Long-term IDR:A-/Stable) following the recently announced deal with Millenniumbcp (BB+/Negative).
Fitch views the transaction as potentially positive for MBCPA’s non-life operations. Under the terms of the deal, MBCPA’s parent company Ageas will own 100% of Ocidental-Companhia Portuguesa de Seguros S.A. (Ocidental Seguros) and Medis – Companhia Portuguesa de Seguros de Saude S.A. (Medis), Ageas’s non-life entities in Portugal.
Ageas agreed to pay EUR122.5m to acquire the 49% of Ocidental Seguros and Medis currently indirectly owned by Millenniumbcp. Ocidental-Companhia Portuguesa de Seguros de Vida S.A. will continue to be 51% indirectly owned by Ageas.
Fitch believes that the planned acquisition fits into Ageas’s strategy to focus on non-life business and allows the group to broaden the scope of distribution agreements in Portugal beyond Millenniumbcp.The announced price is a small percentage of Ageas group’s shareholders’ funds (EUR8.5bn at FY13) and does not affect the group’s credit profile.
The deal reinforces the degree of support from Ageas to its Portuguese non-life entities, which Fitch views positively. MBCPA’s ratings already benefit from a single-notch uplift from Portugal’s ‘BB+’ sovereign rating due to Ageas’s ownership.
Fitch will re-evaluate the strategic importance of MBCPA within the Ageas group and the implications for MBCPA’s ratings stemming from Ageas’s acquiring full control of the non-life entities. In its analysis, Fitch will apply its Group Rating Methodology and determine the strategic importance of the Portuguese life and non-life operations to Ageas. This analysis is expected to be completed over the next few weeks.
