TEXT-S&P cuts Fenix Directo rating

(The following statement was released by the rating agency)


-- On Oct. 10, 2012, we downgraded the Kingdom of Spain to 'BBB-/A-3'from 'BBB+/A-2'. The outlook remains negative.

-- Under our criteria, we generally cap the ratings on domestic insurersat the level of the sovereign local currency rating.

-- As a result, we are lowering our unsolicited ratings on Spanish directinsurer Fenix Directo S.A. by one notch to 'BBB-pi' from 'BBBpi'.

Rating ActionOn Oct. 12, 2012, Standard & Poor's Ratings Services lowered its unsolicitedpublic information (pi) counterparty credit and insurer financial strengthratings on Spanish direct insurer Fenix Directo S.A. to 'BBB-pi' from 'BBBpi'.


The rating action follows our lowering of the long- and short-term ratings onthe Kingdom of Spain (BBB-/Negative/A-3) on Oct. 10, 2012 (see "Spain RatingsLowered To 'BBB-/A-3' On Mounting Economic And Political Risks; OutlookNegative," published on RatingsDirect on the Global Credit Portal). Under ourcriteria, our view of country risk generally constrains our ratings on aninsurer (see "Criteria Update: Factoring Country Risk Into Insurer FinancialStrength Ratings," published on Feb. 11, 2003, and "Nonsovereign Ratings ThatExceed EMU Sovereign Ratings: Methodology And Assumptions," published June 14,2011). Following the sovereign rating action, country risk has, in our view,increased.

The ratings on Fenix reflect our view of the company's good capitalization andgood financial flexibility, as part of the Allianz group (core operatingentities rated AA/Negative/A-1+). We consider these factors to be partlyoffset by the company's challenges as a direct insurer in the very competitiveSpanish motor market, relatively low earnings, weakening financial riskprofile, and exposure to country risk, which we consider to be high.

We further consider that the downgrade of Spain shows the heightened risk inFenix's investment portfolio and capitalization. The company's investmentportfolio includes a large amount of domestic debt and bank deposits, thequality of which has deteriorated to only a good level. A further constraintis the company's purely domestic customer base because it underwrites nearlyall of its business in Spain's motor market.

Related Criteria And Research

-- Spain Ratings Lowered To 'BBB-/A-3' On Mounting Economic And PoliticalRisks; Outlook Negative, Oct. 10, 2012

-- Nonsovereign Ratings That Exceed EMU Sovereign Ratings: MethodologyAnd Assumptions, June 14, 2011

-- Principles Of Credit Ratings, Feb. 16, 2011

-- Ratings Bearing A "pi" Subscript: Methodology And Assumptions, Feb. 9,2011

-- Refined Methodology And Assumptions For Analyzing Insurer CapitalAdequacy Using The Risk-Based Insurance Capital Model, June 7, 2010

-- Criteria Update: Factoring Country Risk Into Insurer FinancialStrength Ratings, Feb. 11, 2003

Ratings ListDowngradedTo From

Fenix Directo S.A. (Unsolicited Ratings)

Counterparty Credit Rating BBB-pi/--/-- BBBpi/--/--Financial Strength Rating BBB-pi/--/-- BBBpi/--/--

(Caryn Trokie, New York Ratings Unit)

((Caryn.Trokie@thomsonreuters.com; 646-223-6318; Reuters Messaging:rm://caryn.trokie.reuters.com@reuters.net))