Fitch upgrades Ethias

Fitch Ratings said it upgraded Ethias SA’s insurer financial strength rating to BBB+ from BBB and long-term issuer default rating to BBB from BBB-.

The outlook is stable.

Fitch also said it upgraded Ethias’s subordinated debt to BB+ from BB.

The upgrades reflect Ethias’s strong risk-adjusted capitalization and improvements in financial fundamentals following management’s efforts to restructure the company, the agency said.

In June 2014, the European Commission announced that the initial requested restructuring measures were successfully implemented with the exception of the run-off of the retail life business, Fitch said. The commission recognizes that current market conditions are an obstacle to the quick run-off of the life business and that Ethias should continue to disengage on a best efforts basis over the coming years, the agency said.

The dispute between the Belgian tax authorities and Ethias is on-going, Fitch added. An unfavorable outcome would impact Ethias’s income statement by the full disputed amount.

But, Fitch said it believes that Ethias’s capitalization has the ability to withstand the loss while remaining well-capitalized within the BBB category.

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