DEVKDeutsche Eisenbahn Versicherung Köln (German insurance)
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The affirmation of Echo Re reflects Fitch's view that, despite the agency's expectations of weak underwriting results for 2015, the reinsurer continues to be "very important" to the DEVK group as defined in the agency's Insurance Rating Methodology.
Fitch views the DEVK group's capital generation as strong.
Fitch believes that DEVK P&C's claims reserving methods are strong enough for the insurer to withstand competitive pressures in Germany's motor insurance market without a loss of market share or deterioration in capitalisation.
Fitch expects DEVK P&C's consolidated net investment return rate to have increased to up to 4.5% in 2015 (2014: 4%), and DEVK Life and DEVK P&C's life insurance entity to have registered stable investment return rates in 2015 (2014: 4.3% and 4.2%, respectively).
In its 2014 consolidated accounts, DEVK P&C had total assets of EUR11bn and DEVK Life had total assets of EUR5.7bn.
Key rating triggers for an upgrade would include substantial improvements of DEVK group life operations' market position and of DEVK's non-life underwriting profitability and resilience to competitive pressure in the German motor insurance market.
Key rating triggers for a downgrade of the DEVK group include the Prism FBM score falling to 'very strong', a significant weakening of reserving methodologies or a substantial decrease in motor premiums due to pricing pressure from competition.
The key rating trigger for an upgrade of Echo Re would be a significant increase in its strategic importance for the DEVK group, in Fitch's view.