AM Best Removes From Under Review With Developing Implications and Affirms Credit Ratings of AXA Corporate Solutions Brasil e América Latina Resseguros S.A.

OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has removed from under review with developing
implications and affirmed the Financial Strength Rating of B++ (Good)
and the Long-Term Issuer Credit Rating of “bbb” of AXA Corporate
Solutions Brasil e América Latina Resseguros S.A. (AXA CS Latam)
(Brazil). The outlook assigned to these Credit Ratings (ratings) is
stable.

In March 2018, the ratings of AXA CS Latam were placed under review with
developing implications following AXA S.A.’s (AXA or the group)
announcement that it had entered into an agreement to acquire 100% of XL
Group Ltd (XL) for a cash consideration of USD 15.3 billion (EUR 12.4
billion). The latest rating actions follow the completion of this
transaction, on Sept. 12, 2018, and the conclusion of AM Best’s
assessment of its impact on the credit fundamentals of the group and its
rated subsidiaries. In AM Best’s opinion, the execution risk associated
with the acquisition has been partially alleviated, as completion of the
transaction and integration to date has been in line with expectations.
Furthermore, although the transaction has resulted in an increase in
financial leverage for AXA, AM Best expects this situation to be
temporary, as the group has presented a clear plan to reduce leverage
over the coming years. AXA is expected to maintain a very strong balance
sheet, strong operating performance, although the XL business has the
potential to introduce some volatility, a very favorable business
profile and very strong enterprise risk management (ERM).

The ratings reflect AXA CS Latam’s balance sheet strength, which AM Best
categorizes as adequate, as well as its adequate operating performance,
neutral business profile and appropriate ERM.

The ratings take into consideration the benefits AXA CS Latam received
as a result of being integrated into AXA’s corporate solutions segment,
led by AXA CS Assurance S.A. AXA is a strong global organization with
strong brand recognition, broad product offering, global systems and
solid risk management infrastructure. The ratings also factor AXA CS
Latam’s strategic importance to AXA through access to Latin America’s
largest economy. The ratings also reflect the capital support via
capital increases and the intergroup reinsurance support provided to AXA
CS Latam, which protects AXA CS Latam’s balance sheet and risk-adjusted
capitalization. Despite the group’s significant resources and business
plan, AXA CS Latam will be challenged to profitably build out its
operations in Brazil’s highly competitive (re)insurance market.
Additionally, Brazil is still going through challenging economic and
political conditions, which could increase operational and execution
risk if much-needed reforms are not instituted in a reasonable time
frame.

Factors that could have a positive impact on AXA CS Latam’s ratings are
sustained and stable profitability, improved risk-adjusted
capitalization or an additional enhancement from the company’s ultimate
parent.

Factors that could have a negative impact on AXA CS Latam’s ratings
include the lack of support from the parent organization, sustained
material volatility in operating performance or deterioration in
risk-adjusted capitalization. Other factors that potentially could have
a negative impact on the ratings are the company’s inability to meet its
profitability targets or a downgrade of Brazil’s country risk tier.

This press release relates to Credit Ratings that have been published
on AM Best’s website. For all rating information relating to the release
and pertinent disclosures, including details of the office responsible
for issuing each of the individual ratings referenced in this release,
please see AM Best’s
Recent
Rating Activity
web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view
Understanding
Best’s Credit Ratings
. For information on the proper media
use of Best’s Credit Ratings and AM Best press releases, please view
Guide
for Media – Proper Use of Best’s Credit Ratings and AM Best Rating
Action Press Releases
.

AM Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit
www.ambest.com
for more information
.

Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.

Contacts

Guilherme (Guy) Monteiro Simoes
Senior Financial Analyst
+1
908 439 2200, ext. 5301

guy.simoes@ambest.com

Scott Mangan
Associate Director
+1 908 439
2200, ext. 5593

scott.mangan@ambest.com

Christopher Sharkey
Manager, Public Relations
+1
908 439 2200, ext. 5159

christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908
439 2200, ext. 5644

james.peavy@ambest.com