Fitch Ratings has affirmed Suncorp Group’s long and short-term issuer default ratings (IDR) at A+ and F1 respectively, but has warned that the group’s bank exposure offsets overall strength.

Fitch has also affirmed Suncorp’s main general insurance operating subsidiary AAI at A+, insurer financial strength (IFS) rating at AA- and subordinated debt at A. The outlooks are stable.

The affirmations reflect Suncorp’s and AAI’s strong brands and franchise, solid operating performances, comprehensive reinsurance program, robust capital ratios, moderate financial leverage, conservative investment approach and historically sound non-life reserving, Fitch explains.

But it says Suncorp subsidiary Suncorp-Metway’s (A+/stable) large banking exposure and its weaker standalone profile offsets these strengths.

Suncorp is Australia's largest non-life insurer and sixth-largest life insurer by premium volume, and sixth largest bank by residential assets. It is New Zealand’s second largest general insurer by premium volume.

“The group has maintained strong competitive positions in core markets, despite increased competition and new participants,” the ratings agency says.

“[Suncorp’s] simplification and optimisations programs have supported stronger group performance over 18 months to the financial half-year ended 2015 compared to the previous three years.”

Fitch considers insurance risk to be “well-mitigated” through “solid reinsurance arrangements”, however an improvement in Suncorp’s ratings is unlikely because the group’s banking exposure is large relative to the size of the insurance entities.

Suncorp-Metway’s “standalone profile acts as a drag on the group rating,” the agency says.