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Fitch downgrades Irish Life
Fitch Ratings said it downgraded Irish Life Assurance plc's long-term issuer default rating to BBB from BBB+ and its subordinated debt to BB+ from BBB-.
The outlooks are negative.
The agency said the downgrade and negative outlook reflect the deterioration in the macro-economic environment in Ireland. The impact of the Irish government's austerity package, high unemployment and reduced consumer confidence could trigger higher policyholder lapse rates and lower sales volumes, threatening Irish Life's profitability, Fitch said.
The downgrade also reflects the capital that Irish Life will provide to parent company Irish Life & Permanent plc through a €100 million securitization, which will reduce Irish Life's financial flexibility and future profits, Fitch added.
Despite the downgrade, the agency said that Irish Life's ratings continue to reflect its strong standalone capitalization, comparatively low-risk business and strong market position.
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