Research Update: Gothaer Insurance Group Outlook Revised To Positive From Stable On Planned Merger; 'A' Ratings Affirmed

We expect the announced merger of German insurance group Gothaer with Barmenia Versicherungen (Barmenia) will likely go ahead, following approvals from the German cartel office and strong management commitments. In our view, the planned merger will improve Gothaer's competitiveness by increasing its scale and diversification. We believe the combined group's financial risk profile will be at least very strong, with sufficient buffer above the 99.95% confidence level, according to our capital model. We therefore revised our outlook on Gothaer's core operating entities to positive from stable and affirmed our 'A' long-term insurer financial strength and issuer credit ratings on these entities. The positive outlook reflects our view that we could raise the ratings over the next 12-24 months by one

...- We expect the announced merger of German insurance group Gothaer with Barmenia Versicherungen (Barmenia) will likely go ahead, following approvals from the German cartel office and strong management commitments. In our view, the planned merger will improve Gothaer's competitiveness by increasing its scale and diversification. - We believe the combined group's financial risk profile will be at least very strong, with sufficient buffer above the 99.95% confidence level, according to our capital model. - We therefore revised our outlook on Gothaer's core operating entities to positive from stable and affirmed our 'A' long-term insurer financial strength and issuer credit ratings on these entities. - The positive outlook reflects our view that we could raise the ratings over the next 12-24 months by one notch if the merger goes ahead as planned and improves the combined group's competitiveness, with Gothaer maintaining its very strong financial risk profile....

Research Update