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Fitch Rates VIVAT NV's Subordinated Notes 'BB(EXP)'.

London: Fitch Ratings has assigned VIVAT NV's (VIVAT) subordinated notes an expected 'BB(EXP)' rating. The final rating is contingent on the receipt of final documents conforming to information already received.

The notes are rated three notches below VIVAT's 'BBB' Issuer Default Rating (IDR) to reflect their subordination and loss absorption features, in line with Fitch's notching criteria.


The proposed Tier 2 notes will be undated with a first call date after five years from issue. The issue will rank pari passu and without any preference among themselves with all other outstanding dated or undated subordinated obligations of VIVAT.

The notes will include mandatory interest deferral features that would be triggered if VIVAT is unable to meet the applicable solvency capital requirement (or minimum capital requirement), as defined in the Solvency II directive. In addition, the notes will also include an optional interest deferral clause.

VIVAT will use the net proceeds to repay the group's existing subordinated debt issued to Anbang Insurance Group Co. Ltd. Any remaining proceeds will be used for general corporate purposes.

We expect to apply a baseline recovery assumption of 'poor' to the proposed notes, reflecting the level of subordination, and our assessment of 'moderate' non-performance risk due to the notes' mandatory interest and redemption deferral features. As a result, the rating will be notched down three times from the IDR, comprising two notches for recovery prospects and one notch for non-performance risk. In perpetual form the optional interest deferral feature does not constitute any additional non-performance risk relative to the mandatory interest deferral features.

According to Fitch's methodology, the expected issue would be classified as 100% capital due to regulatory override within Fitch's risk-based capital assessment, and 100% debt for the agency's financial-leverage calculations. The issue is not expected to lead to a material change in our assessment of VIVAT's financial leverage as proceeds will largely be used for refinancing purposes.


The notes' ratings are subject to the same sensitivities that may affect VIVAT's Long-Term IDR (for more details, see 'Fitch revises VIVAT's Outlook to Negative, Affirms Ratings' dated 20 June 2017 at

Fitch currently rates VIVAT as follows:


IDR 'BBB'; Outlook Negative

- Core insurance entities REAAL Schadeverzekeringen NV, and SRLEV NV

Insurer Financial Strength Ratings 'BBB+'; Outlook Negative

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Publication:Daily the Pak Banker (Lahore, Pakistan)
Date:Jan 10, 2018
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