FIATC Mutua de Seguros y Reaseguros

The ratings on FIATC remain influenced by us needing to see a track-record of profitable earnings that finance growth in capital requirements, keeping it firmly in the 'AA' range. The stable outlook on FIATC reflects our expectation that the company will continue to benefit from its leading position in Catalonia and maintain resilient capital adequacy over the next 12-24 months amid the pandemic. The outlook also incorporates our expectation that FIATC's mutual funds will increase at least in line with its capital requirements. We could lower the ratings over the next two years if FIATC's earnings and capital deteriorated significantly, underperforming the Spanish market and thereby weakening FIATC's competitiveness or financial stability. We could raise the ratings on FIATC over

...We expect FIATC to navigate the pandemic thanks to better technical results that compensate for pressure on its financial performance. FIATC is currently benefiting from reduced frequency of claims on certain lines of business. Notably health and motor represent almost 40% of premiums and we expect to see an improvement in their loss ratios. This will support better technical results for 2020, which will compensate for weaker financial results. We anticipate FIATC will post net income of 10 million-15 million backed by a net combined ratio of 96%-98% (100.5% in 2019 and 102.9% in 2018). FIATC is likely to maintain a leading position as mutual insurer in Catalonia, developing an already strong franchise in health care and retirement services. The mutual has a well-balanced insurance portfolio that includes health, property, motor, and life. The life business has been the main growth driver mostly thanks to a short-term single-premium savings product called InverCapital. FIATC is also developing...

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