SNS Reaal downgraded; loses A- rating

Rating agency Standard & Poor’s (S&P) has downgraded SNS Reaal bancassurance group’s insurance operations.

It downgraded its insurer financial strength to BBB+ from A-, after it continued to suffer losses in the first half of 2014. At the same time, S&P lowered to BBB- from BBB its counterparty credit rating on the group's insurance holding company, REAAL Verzekeringen NV.

“We expect the group to struggle to restore profitability in 2015-2016 given declining premiums and pressures on profitability in the Dutch market and negative investment spreads,” said the rating agency.

It added that profitability had been suffering from low investment yields through asset de-risking and repeated "one-off" losses that have impaired the group's underlying result.

S&P said: “We consider the underlying result to be close to break-even and that therefore, the group is unlikely to realise a bottom-line profit for 2014 and so meet the conditions we set in May for avoiding a downgrade.”