Gothaer Insurance Group

The positive outlook indicates that we could upgrade Gothaer in the next 12-24 months if the group establishes a track record of firmly consolidating capital at very strong levels, while stabilizing investment risks at current levels. We could revise the outlook to stable if Gothaer's capital adequacy were to weaken below the 'AA' level for a prolonged period over the next 12-24 months because of rising capital requirements, significantly lower retained earnings, or a shift back toward a more aggressive risk appetite. Real GDP growth of 0.5%-1.0% over 2019-2021. Inflation remaining around 2% coupled with continuously low unemployment rates in Germany over 2019-2021. Negative 10-year average bond yields of -0.5% in 2020 only gradually increasing to -0.1% in 2022 in

...We expect Gothaer will continue to prioritize earnings generation over growth and maintain its well-diversified product portfolio and distribution channels as a basis for its sound competitiveness. We anticipate the group's P/C business will drive overall premiums. In our opinion, Gothaer will leverage its established distribution network to promote cross selling and further establish its presence in the mature German insurance market. However, because of the focus on the domestic market we believe the group's business profile is somewhat narrower than higher rated European peers. We expect Gothaer to maintain a stable and solid underwriting performance in light of its prominent position within the German insurance market. Gothaer has historically demonstrated sound underwriting performance in the P/C business and we do not foresee any material deviation. In the life business the ongoing strategic shift to less-capital-intensive products will stabilize earnings in the low-yield environment....

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