Moody's: wordt het junk of net niet...
SNS REAAL Insurance activities
The regulatory solvency for SNS REAAL's insurance activities declined to 176% at year-end 2012 from 203% in 2011. SNS REAAL also reported EUR549 million of exceptional losses for 2012 related to its insurance activities. Although we consider these losses as one-off items,we believe they also reflect the challenging Dutch insurance market environment together with ongoing intrinsic challenges faced by SNS REAAL's insurance activities.
In particular, SNS REAAL recorded goodwill impairments in life and non-life (respectively EUR141 million and EUR110 million), an intangibles impairment related to the life distribution network (EUR18 million), a EUR129 million loss related to a shortfall in the valuation of the
insurance liabilities at Zwitserleven, and provisioned an additional EUR56 million for the settlement of claims related to unit-linked policies. These items are in line with Moody's expectation of continued profitability pressure for all Dutch insurance companies stemming
mainly from the persistently low interest rates environment and the continuous fierce competition amongst Dutch insurers, - but also with banks - in both life and non-life.
Nevertheless, these challenges are exacerbated by the intrinsic weaknesses of SNS REAAL's insurance activities, which themselves are influenced by contagion risks from the group's restructuring activities. In particular, we believe that the issues faced by SNS Bank which led to the nationalization of SNS REAAL group has weakened the franchise of its
insurance activities, especially in the group life segment, as evidenced by the EUR95 million impairment of the Zwitserleven brand name. In addition, potential EC remedies could further impact the market shares of the insurance activities.
Moody's downgrade of REAAL Schadeverzekeringen and SRLEV's IFSRs to Baa2 in January 2013 already reflected the foreseeable contagion risks between the insurance and the banking operations of the SNS REAAL group. We will assess the potential residual risks to the insurance operations' market position, profitability, capitalisation and access to capital markets, in the context of the bank's standalone credit profile and the expected role of the insurance operations within the SNS REAAL group.