London, 12 July 2016 -- Moody's Investors Service has today affirmed all the ratings of
Assicurazioni Generali S.p.A (Baa1 insurance financial strength;
Baa2 senior debt; Baa3 senior subordinated debt; Ba1(hyb) preference
stock), the third largest insurance group in Europe headquartered
in Italy, with a stable outlook. Moody's also affirmed
the ratings of Generali's main subsidiaries. A full list
of ratings affected by the rating action is available at the end of this
press release.
RATINGS RATIONALE
The affirmation of Generali's ratings with a stable outlook reflects
the group's strong and diversified business profile, as well
as the improvements in profitability and capitalisation over the recent
years. Moody's views Generali's business profile as
strong thanks to very good market positions in its main markets,
notably Italy, Germany and France, a predominance of retail
business, which is typically less volatile than the commercial business,
and very good geographic and business diversification. The stable
outlook also reflects Moody's expectations that the impact of low
interest rates and of the volatility in financial markets will remain
moderate on Generali's profitability and capital.
Moody's adds that Assicurazioni Generali S.p.A's
Baa1 insurance financial strength rating remains constrained by the credit
quality of the sovereign of Italy (Baa2, stable outlook) given the
group's operating and asset exposure to Italy. Italian sovereign
bonds represented 17% of Generali's total investments (at
market value) and 257% of the group's shareholders'
equity as of 31 March 2016, while the group sourced 34% of
its premiums and 39% of its life and P&C operating profits
from Italy in 2015. The Baa1 rating is one notch above the sovereign
rating, given the group's diversification outside of Italy
and the group's ability to share potential investment losses with
policyholders in its life business.
According to Moody's, Generali has been improving its resilience
to a hypothetical scenario of stress on Italian assets, thanks to
(1) a decrease in the exposure to Italian government bonds, both
on an absolute nominal value basis and as a proportion of its investments,
(2) a change in business mix in life insurance with an increased weight
of unit-linked policies (unit-linked represented 17%
of the life Italian premiums in 2015 vs 4% in 2012) and (3) an
improvement in capital, as illustrated for example by the increase
in the group's economic capital ratio (which increased to 202%
at year-end 2015 from 186% at year-end 2014).
Nonetheless, Moody's mentions that Generali's economic
capital ratio declined in the first quarter of 2016 (to 188%),
following the sharp decline in interest rates and decline in equity markets,
and has likely further been affected by market movements in the second
quarter of the year, even if the sensitivities of this ratio to
market movements are moderate. Positively, Moody's
expects this ratio to recover over time thanks to the group's earnings
generation (which represented 16 percentage points of the ratio in 2015
before dividend distribution and 11 percentage points after dividend).
Commenting on the impact of low interest rates, Moody's says
that the decline in rates will affect the group's investment return.
Nonetheless, the rating agency believes that Generali has a high
ability to pass a meaningful portion of this decline to policyholders
by reducing credited rates in its life business. Moody's
mentions that Generali's current investment return was 3.4%
in 2015, which is 160bps higher than the average guaranteed rate
(1.8%). Moody's adds that the group's
ability to reduce credited rates is very high in France and Italy,
but lower in Germany (which represents around one third of the group's
life liabilities).
Commenting further on profitability, Moody's mentions that
some of the recent improvements in the group's profitability resulted
from a strong performance of the Italian business. Moody's
expects the profitability of the Italian P&C business to deteriorate
in the next 12-18 months given the strong price competition in
this market. Recent volatility in financial markets will also likely
affect the group's ability to shift its new life production from
traditional guaranteed products to unit-linked products.
Nonetheless, Moody's believes that these negative developments
will be partly offset by improvements in other areas, including
for example a continued focus on cost reduction.
WHAT COULD CHANGE THE RATINGS UP/DOWN
Moody's says that upwards pressure on Generali's ratings could
arise in case of an improvement in the credit quality of Italy or in case
of a continued improvement of the group's solvency and/or a continued
reduction in exposure to Italian assets.
Conversely, Moody's says that (1) a deterioration in the credit
quality of Italy, (2) a material deterioration of solvency or a
significantly higher exposure to Italian assets or (3) a deterioration
in operating performance also resulting in a deterioration in the group's
financial flexibility, would lead to downward pressure on Generali's
ratings. In addition, a deterioration in the cash flows at
the holding, for example with a reduction in the cash flow coverage
(available cash flows over holding interests and expenses) below 2x would
place pressure on Assicurazioni Generali S.p.A's debt
ratings.
LIST OF AFFECTED RATINGS
Issuer: Assicurazioni Generali S.p.A
..Affirmations:
....Insurance Financial Strength Rating,
affirmed Baa1
....Junior Subordinate Medium-Term
Note Program, affirmed (P)Ba1
....Senior Subordinate Medium-Term
Note Program, affirmed (P)Baa3
....Senior Unsecured Medium-Term Note
Program, affirmed (P)Baa2
....Preferred Stock, affirmed Ba1(hyb)
....Senior Subordinated Regular Bond/Debenture,
affirmed Baa3(hyb)/Baa3
....Senior Unsecured Regular Bond/Debenture,
affirmed Baa2
..Outlook Actions:
....Outlook remains Stable
Issuer: Generali Deutschland AG
..Affirmations:
....Insurance Financial Strength Rating,
affirmed A3
..Outlook Actions:
....Outlook remains Stable
Issuer: AachenMuenchener Lebensversicherung AG
..Affirmations:
....Insurance Financial Strength Rating,
affirmed A3
..Outlook Actions:
....Outlook remains Stable
Issuer: AachenMuenchener Versicherung AG
..Affirmations:
....Insurance Financial Strength Rating,
affirmed A3
..Outlook Actions:
....Outlook remains Stable
Issuer: Advocard Rechtschutzversicherung AG
..Affirmations:
....Insurance Financial Strength Rating,
affirmed A3
..Outlook Actions:
....Outlook remains Stable
Issuer: Central Krankenversicherung AG
..Affirmations:
....Insurance Financial Strength Rating,
affirmed A3
..Outlook Actions:
....Outlook remains Stable
Issuer: Cosmos Lebensversicherungs-AG
..Affirmations:
....Insurance Financial Strength Rating,
affirmed A3
..Outlook Actions:
....Outlook remains Stable
Issuer: Cosmos Versicherung AG
..Affirmations:
....Insurance Financial Strength Rating,
affirmed A3
..Outlook Actions:
....Outlook remains Stable
Issuer: Dialog Lebensversicherungs-AG
..Affirmations:
....Insurance Financial Strength Rating,
affirmed A3
..Outlook Actions:
....Outlook remains Stable
Issuer: Envivas Krankenversicherung AG
..Affirmations:
....Insurance Financial Strength Rating,
affirmed A3
..Outlook Actions:
....Outlook remains Stable
Issuer: Generali Deutschland Pensionskasse AG
..Affirmations:
....Insurance Financial Strength Rating,
affirmed A3
..Outlook Actions:
....Outlook remains Stable
Issuer: Generali Lebensversicherung AG
..Affirmations:
....Insurance Financial Strength Rating,
affirmed A3
..Outlook Actions:
....Outlook remains Stable
Issuer: Generali Versicherung AG
..Affirmations:
....Insurance Financial Strength Rating,
affirmed A3
..Outlook Actions:
....Outlook remains Stable
Issuer: Generali IARD
..Affirmations:
....Insurance Financial Strength Rating,
affirmed Baa1
..Outlook Actions:
....Outlook remains Stable
Issuer: Generali Vie
..Affirmations:
....Insurance Financial Strength Rating,
affirmed Baa1
..Outlook Actions:
....Outlook remains Stable
Issuer: Generali Italia S.p.A.
..Affirmations:
....Insurance Financial Strength Rating,
affirmed Baa1
..Outlook Actions:
....Outlook remains Stable
Issuer: Generali Finance B.V.
..Affirmations:
....Backed Junior Subordinated Regular Bond/Debenture,
affirmed Ba1(hyb)
....Backed Junior Subordinate Medium-Term
Note Program, affirmed (P)Ba1
....Backed Senior Unsecured Medium-Term
Note Program, affirmed (P)Baa2
....Backed Senior Subordinate Medium-Term
Note Program, affirmed (P)Baa3
..Outlook Actions:
....Outlook remains Stable
PRINCIPAL METHODOLOGIES
The principal methodologies used in rating Assicurazioni Generali S.p.A,
Generali Deutschland AG, Generali Italia S.p.A.
and Generali Finance B.V. were Global Life Insurers published
in April 2016, and Global Property and Casualty Insurers published
in June 2016. The principal methodology used in rating AachenMuenchener
Lebensversicherung AG, Cosmos Lebensversicherungs-AG,
Dialog Lebensversicherungs-AG, Generali Deutschland Pensionskasse
AG, Generali Lebensversicherung AG and Generali Vie was Global Life
Insurers published in April 2016. The principal methodology used
in rating AachenMuenchener Versicherung AG, Advocard Rechtschutzversicherung
AG, Central Krankenversicherung AG, Cosmos Versicherung AG,
Envivas Krankenversicherung AG, Generali Versicherung AG and Generali
IARD was Global Property and Casualty Insurers published in June 2016.
Please see the Ratings Methodologies page on www.moodys.com
for a copy of these methodologies.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the credit rating action on the support provider and in relation to
each particular credit rating action for securities that derive their
credit ratings from the support provider's credit rating.
For provisional ratings, this announcement provides certain regulatory
disclosures in relation to the provisional rating assigned, and
in relation to a definitive rating that may be assigned subsequent to
the final issuance of the debt, in each case where the transaction
structure and terms have not changed prior to the assignment of the definitive
rating in a manner that would have affected the rating. For further
information please see the ratings tab on the issuer/entity page for the
respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this credit rating action,
and whose ratings may change as a result of this credit rating action,
the associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
The person who approved Assicurazioni Generali S.p.A and
Generali Finance B.V. credit ratings is Simon Harris,
MD-Gbl Ins and Mgd Invests, Financial Institutions Group,
JOURNALISTS: 44 20 7772 5456, SUBSCRIBERS: 44 20 7772
5454. The person who approved Generali Deutschland AG, AachenMuenchener
Lebensversicherung AG, AachenMuenchener Versicherung AG, Advocard
Rechtschutzversicherung AG, Central Krankenversicherung AG,
Cosmos Lebensversicherungs-AG, Cosmos Versicherung AG,
Dialog Lebensversicherungs-AG, Envivas Krankenversicherung
AG, Generali Deutschland Pensionskasse AG, Generali Lebensversicherung
AG, Generali Versicherung AG, Generali IARD, Generali
Vie and Generali Italia S.p.A. credit ratings is
Antonello Aquino, Associate Managing Director, Financial Institutions
Group, JOURNALISTS: 44 20 7772 5456, SUBSCRIBERS:
44 20 7772 5454.
The below contact information is provided for information purposes only.
Please see the ratings tab of the issuer page at www.moodys.com,
for each of the ratings covered, Moody's disclosures on the
lead analyst and the Moody's legal entity that has issued the ratings.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Benjamin Serra
VP - Senior Credit Officer
Financial Institutions Group
Moody's France SAS
96 Boulevard Haussmann
Paris 75008
France
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Simon Harris
MD-Gbl Ins and Mgd Invests
Financial Institutions Group
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Releasing Office:
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Moody's affirms Assicurazioni Generali S.p.A's Baa2 senior debt rating ; stable outlook
