The analytics arm of
), Moody's Analytics or MA, will provide its Solvency II
solutions to Gjensidige, an insurance company from Norway.
Gjensidige will be using MA's Solvency II software,
RiskIntegrity, which would enable the Norwegian company to better
manage its risks and meet regulatory demands.
RiskIntegrity was added recently to Moody's Analytics
Enterprise Risk Solutions Suite. Using RiskIntegrity, Insurance
companies can get consolidated solutions such as data management,
Solvency Capital Requirement ("SCR") calculations and regulatory
The increasing regulatory mandates have compelled insurance
companies around the world to look for consolidated risk
management solutions. Moody's Analytics has been offering its
solutions to a number of insurance and financial companies, which
is well reflected in its encouraging performance in the first
nine months of fiscal 2012.
During the aforementioned period, revenue from the Moody's
Analytics segment increased 19% year over year. Within this
segment, Enterprise Risk Solutions increased 20% year over year.
Moreover, the company expects Moody's Analytics to grow in the
high-teens percentage rate in fiscal 2012, while revenue from
Enterprise Risk Solutions is expected to grow in the low-20s
Based on the diversified credit research business model and
international growth opportunities, we believe that Moody's
remains a solid franchise in rating debt instruments. Moreover,
strength in new domestic debt issuance and improving clarity over
the regulatory climate in Europe are positives.
However, increasing headcount and incremental compliance
related costs (due to Dodd-Frank adoption) are expected to drive
operating expenses higher in the near term. Increasing
Dun & Bradstreet Corp
) and privately-held Fitch Ratings Inc. and Standard & Poor's
Financial Services LLC also remains a headwind going forward.
We remain Neutral on a long-term basis. Currently, Moody's has
a Zacks #2 Rank (Buy).
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