Fitch Ratings has today affirmed Nuernberger Lebensversicherung AG's ("NLV"), Nuernberger Allgemeine Versicherung AG's ("NAV") and Nuernberger Krankenversicherung AG's ("NKV") Insurer Financial Strength ("IFS") ratings at 'A+'.
Fitch has also affirmed listed holding company Nuernberger Beteiligungs-Aktiengesellschaft's ("NB") Long-term Issuer Default Rating ("IDR") at 'A' and its EUR100m subordinated debt at 'BBB+'. All rating Outlooks are Stable. At the same time, Fitch has again awarded NLV, NAV and NKV the Financial Strength Seal, which is only given to financially strong insurers.

The ratings reflect the Nuernberger group's strong consolidated capital position as well as the potential of its diversified distribution channels. Life insurer NLV, with its high ratio of IFA business, is following a profitable niche strategy and is viewed by the market as a supplier of innovative unit-linked and disability products, while the relatively small NKV is a profitable private health insurer. Property and casualty insurer NAV benefits from a unique sales channel based on its strong connections with automobile distribution networks. Fitch believes that the restructuring of this distribution channel and the implementation of the insurance mediation directive will not materially impact the business model. However, the agency also notes that the potential impact of this reorganisation on the financial strength of the insurer has been reduced strongly.

"We view the diversity of the distribution channels, incorporating strong IFA business as well as the unique automobile distribution network, to be a major asset for the Nuernberger Group. The difficult non-life environment, which has resulted in a decline of over 11% of gross written premiums since 2004 is, however, likely to continue to restrain future earnings growth," says Christos Stavrianidis, Analyst in Fitch's Insurance Group. "In life insurance, Nuernberger benefits from its well established relationships with non-tied agents and its strong position in the areas of disability and unit-linked insurance, which positively influences the strong embedded value results," adds Tim Ockenga, Director in Fitch's Insurance Group.

The insurance operations of the Nuernberger group generated gross written premiums ("GWP") of EUR3bn in 2006, which makes the issuer one of the larger German insurance groups. The main subsidiaries are NLV with GWP (IFRS, unconsolidated) of EUR2,090m in 2006 (2005: EUR2,038m), NAV with GWP of EUR786m in 2006 (2005: EUR815m) and NKV with GWP of EUR130m in 2006 (2005: EUR118m). At year-end 2006, Nuernberger had a total of 7,618m insurance policies, an increase by 2.5% on the previous year (2005: 7,429m).

All the companies are 100% subsidiaries of the holding company NB. Fitch also notes that NLV, NAV and NKV are fully integrated within the Nuernberger structure, as they have the same management and distribution channels, a degree of client commonality and also share the same brand name. Fitch views these three operating entities as core to the Nuernberger Group. In view of these group linkages, the IFS ratings assigned to the operating subsidiaries NLV, NAV and NKV are the same.

The consolidated Nuernberger group's gross earnings have increased to EUR90m in 2006 from EUR67m in 2005, while net earnings (after minorities) have increased strongly to EUR40m in 2006 from EUR21m in 2005. Fitch notes that the tax rate has been materially impacted by the one-off tax effect resulting from the revision of the accounting rules for corporate tax assets. Fitch expects the group to increase profitability further in the near term.