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A.M. Best Revises Issuer Credit Outlook to Positive for Assicurazioni Generali S.p.A.
[December 13, 2017]

A.M. Best Revises Issuer Credit Outlook to Positive for Assicurazioni Generali S.p.A.


A.M. Best has revised the outlook to positive from stable for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term ICR of "a" of Assicurazioni Generali S.p.A. (Generali) (Italy) and its main rated subsidiaries. The outlook of the FSR is stable. Concurrently, A.M. Best has revised the outlook to positive from stable and affirmed the Long-Term Issue Credit Ratings (Long-Term IRs) of debt instruments issued or guaranteed by Generali. (See below for a detailed list of companies and debt instruments.)

The ratings reflect Generali's balance sheet strength, which A.M. Best categorises as strong, as well as its adequate operating performance, very favourable business profile and appropriate enterprise risk management. The positive outlook on the Long-Term ICR reflects the impact of actions implemented as part of Generali's strategic plan, which aims to focus on technical discipline and adapt the group to a persisting low interest rate environment, on balance sheet strength and profitability metrics. A.M. Best expects Generali's strategic plan, if successfully executed, to result in stable and resilient earnings over the market cycle.

Generali's balance sheet strength is assessed as strong, underpinned by risk-adjusted capitalisation, as measured by Best's Capital Adequacy Ratio (BCAR), at the strongest level, and solid organic capital generation, which contributed to the increase of the group's regulatory solvency ratio to 215% as at 30 September 2017. An offsetting rating factor remains Generali's significant exposure to Italian bonds, amounting to EUR 64.4 billion as at 30 June 2017 (260% of shareholders' equity). Whilst A.M. Best notes that Generali holds the majority of these sovereign bonds for asset and liability management purposes, this, together with significant investment exposure to financial institutions, makes the group's risk-adjusted capitalisation sensitive to shocks in the financial markets. The balance sheet strength assessment also reflects Generali's financial leverage, which is higher than that of peers.

Generali's performance is proving resilient to the challenging market conditions prevailing in its core European markets, with the group reporting an operating result of EUR 3.6 billion for the first nine months of 2017. Profitability is supported by solid technical metrics. At the end of 2016, the five-year average non-life combined ratio stood at 94.3% (as per A.M. Best's calculation). Meanwhile, in the life segment, new business margins have been improving (standing at 25.9% at year-end 2016 - calculated on annual premium equivalent), driven by the actions taken by management to reduce the average guarantee in Generali's book and develop capital efficient products offering better risk-adjusted profitability. Prospective operating performance is expected to benefit from the continuous efforts of the group to adapt its business mix to the persisting challenging market conditions and focus on technical fundamentals in the life and non-life segments. In addition, Generali plans to increase the efficiency of its asset management business unit, by developing a real asset management platform targeting European insurers, and to reduce its net operating expenses by EUR 200 million by 2018, by restructuring its operations in mature markets. If executed successfully, Generali's strategic plan could lead A.M. Best to revise its performance assessment to strong.

Generali remains one of the largest insurers in Europe, with gross written premium in excess of EUR 70 billion in 2016. The group's very favourable business profile is supported by leading and defensible positions in each of its core markets, namely Italy, Germany, France and Central and Eastern Europe, underpinned by a solid franchise. Generali benefits from excellent access to market as a result of its multi-channel distribution strategy.

The group has a strong proprietary network, particularly in Italy and Germany, and is in the process of strengthening its distribution capability in France.


The outlook of the Long-Term ICR has been revised to positive from stable, and the FSR of A (Excellent) with a stable outlook and Long-Term ICR of "a" have been affirmed for Assicurazioni Generali S.p.A. and its following subsidiaries:

  • Generali Italia S.p.A.
  • Generali Deutschland AG
  • AachenMünchener Lebensversicherung AG
  • AachenMünchener Versicherung AG
  • Generali Versicherung AG
  • COSMOS Lebensversicherungs AG
  • COSMOS Versicherung AG
  • Central Krankenversicherung AG
  • Generali Vie S.A.
  • Generali IARD S.A.
  • Ceská pojištovna a.s.

The outlook of the Long-Term ICR has been revised to positive from stable and the Long-Term ICR of "bbb" has been affirmed for Generali France S.A.

The following Long-Term IRs have been affirmed, with the associated outlook revised to positive from stable:

Assicurazioni Generali S.p.A.-

-- "a-" on EUR 1,250 million 2.875% senior unsecured notes, due 2020

-- "a-"on EUR 1,750 million 5.125% senior unsecured notes, due 2024

-- "bbb+" on EUR 1,250 million 5.5% fixed/floating rate senior dated subordinated notes, due 2047 (callable in 2027)

-- "bbb+" on EUR 850 million 5% fixed/floating rate senior dated subordinated notes, due 2048 (callable in 2028)

-- "bbb+" on EUR 1,000 million 4.125% fixed rate senior dated subordinated notes, due 2026

-- "bbb+" on EUR 1,250 million 7.75% fixed/floating rate senior subordinated notes, due 2042 (callable in 2022)

-- "bbb+" on EUR 750 million 10.125% fixed/floating rate senior subordinated notes, due 2042 (callable in 2022)

-- "bbb" on GBP 495 million 6.416% fixed/floating rate junior subordinated perpetual debentures, callable in 2022

-- "bbb" on GBP 350 million 6.269% fixed/floating rate junior subordinated perpetual debentures, callable in 2026

Generali Finance B.V. (guaranteed by Assicurazioni Generali S.p.A.)-

-- "bbb" on EUR 1,500 million 4.596% fixed/floating rate more deeply subordinated perpetual notes

The following indicative Long-Term IRs on securities available under the EUR 15 billion medium-term note programme that was renewed in June of this year have been affirmed, with the outlook revised to positive from stable:

Assicurazioni Generali S.p.A. and Generali Finance B.V.-

-- "a-" on all senior unsecured notes to be issued under the programme

-- "bbb+" on all senior subordinated notes to be issued under the programme

-- "bbb" on all junior subordinated notes to be issued under the programme

This press release relates to Credit Ratings that have been published on A.M. 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 A.M. 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 A.M. Best press releases, please view Guide for Media - Proper Use of Best's Credit Ratings and A.M. Best Rating Action Press Releases.

A.M. Best is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2017 by A.M. Best Rating Services, Inc. and/or its subsidiaries. ALL RIGHTS RESERVED.


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