‘Sustainable’ improvements prompt Aviva rating upgrade from Moody’s
Insurance group Aviva has entered a new ratings category following an upgrade from ratings agency Moody’s.
Moody’s has upgraded the insurance financial strength rating of Aviva’s main UK insurance companies by one notch to Aa3 from A1.
While the Aviva rating upgrade is only one notch, it has pushed the insurance group into a new ratings category – it is now a double-A-rated insurer on the Moody’s rating scale, while before it was in the single-A category.
According to Moody’s, firms in its Aa category are “high quality and are subject to very low credit risk”. Companies in the A category are “upper-medium-grade and are subject to low credit risk”.
The insurance financial strength rating upgrade affects three companies: Aviva International Insurance Limited, Aviva Insurance Limited and Aviva Life & Pensions UK Limited.
The ratings agency has also upgraded the group’s debt rating to A2 from A3 and its commercial paper rating to P-1 from P-2.
Moody’s said the upgrades reflected “recent improvements in the group’s profitability, capital and financial flexibility and Moody’s expectations that these improvements are sustainable”.
It added that it expects the volatility of Aviva’s results to be low thanks to the de-risking and business refocusing that the company initiated in 2013.
Aviva chief financial officer Tom Stoddard said: “This upgrade by Moody’s to Aa3 is an important milestone for Aviva. It recognises the significant progress in recent years to strengthen Aviva’s balance sheet, which resulted in an increase to our Solvency II capital surplus to £11.4bn at 30 June 2017.”
He added: “We remain focused on extending our track record of growth in operating EPS and the significant levels of surplus cash building at group centre provide scope for us to continue to reduce debt and invest in growing our businesses”.