London, 23 October 2018 -- Moody's Investors Service has today taken the following rating actions
on three Italian insurance groups and related entities:
- Assicurazioni Generali S.p.A: Baa1 insurance
financial strength rating (IFSR) affirmed, outlook stable.
Italian and French subsidiaries' IFSRs affirmed at Baa1, German
subsidiaries' IFSRs affirmed at A3 -- outlooks stable
- Allianz S.p.A.: A3 IFSR confirmed,
outlook changed to stable from Rating under Review
- UnipolSai Assicurazioni S.p.A.: IFSR
downgraded to Baa3 from Baa2, outlook changed to stable from Rating
under Review
The rating actions were prompted by the rating agency's downgrade of Italy's
government bond rating from Baa2 Ratings under Review to Baa3 with a stable
outlook. For further information on the sovereign rating action,
please refer to Moody's press release dated 19 October 2018 (Moody's downgrades
Italy's ratings to Baa3, stable outlook; https://www.moodys.com/research/--PR_390302).
Moody's considers that the above insurance companies' key credit fundamentals
(asset quality, capitalisation, profitability and financial
flexibility) are partly correlated with -- and thus linked
to -- the economic and market conditions in Italy,
where they are domiciled and have significant operations.
Moody's also notes that the IFSRs of both Allianz S.p.A.
and Assicurazioni Generali S.p.A are above the sovereign
rating, reflecting in the former the benefits of ownership from
a strong parent (Allianz SE, Aa3 IFSR, stable) and,
in the latter, the significant geographical diversification of the
Generali group.
A complete list of ratings affected by these rating actions is available
at the end of this press release.
RATINGS RATIONALE
--- ASSICURAZIONI GENERALI S.P.A:
The affirmation of Assicurazioni Generali S.p.A's
IFSR with a stable outlook, primarily reflects the Generali group's
diversification outside Italy and the improved resilience of the group
to an hypothetical stress scenario on Italian assets. Assicurazioni
Generali S.p.A acts both as an operating insurance company
and a holding company for the Generali group.
At half-year 2018, Generali's non-Italian business
accounted for 64% of the group's premiums and 62% of the
group's operating results, providing significant geographic diversification
outside of Italy for the group. Generali's non-Italian operations,
notably the German and the French operations, which accounted for
21% and 18% of the group's gross written premiums respectively
at half-year 2018, have limited direct exposure to Italy
and, therefore, their stand-alone credit profile is
not affected by the downgrade of the Italian sovereign. The strong
geographic diversification provided by these operations outside of Italy
largely contributes to the affirmation of the Generali group's ratings
in spite of the downgrade of the Italian sovereign.
Generali has also been improving its resilience to an hypothetical stress
scenario on Italian assets in recent years, by (1) decreasing its
exposure to Italian government bonds, both on an absolute nominal
value basis and as a proportion of its investments, (2) changing
the business mix in life insurance with an increased weight of unit-linked
policies (unit- and index-linked represented 20%
of the life gross premiums written in Italy at H1 2018 vs 17% in
2015) and (3) improving its capitalisation with group regulatory and economic
Solvency ratios of 201% and 221% respectively at half-year
2018 compared to 178% and 194% at YE16.
Nonetheless, Assicurazioni Generali S.p.A still has
a significant exposure to Italian sovereign risk, notably through
its Italian subsidiary Generali Italia S.p.A. At
half-year 2018, Italian government bonds at market value
represented 17% of Generali group's total investment portfolio
(excluding unit-linked assets) and about 242% of the group's
reported shareholders' equity. In addition, the group sourced
36% of its gross written premiums in Italy at half-year
2018. As a result, Moody's maintains a limited notching differential
between Assicurazioni Generali S.p.A's IFSR and the Italian
sovereign rating, which has now increased to two notches following
the downgrade of the Italian government debt, but is unlikely to
exceed that amount going forward.
--- GENERALI ITALIA S.P.A:
The rating affirmation of Generali Italia S.p.A.
--Baa1 IFSR with outlook remaining stable--
reflects the affirmation of the ratings and outlook of its parent Assicurazioni
Generali S.p.A. Moody's mentions that Generali Italia's
credit profile and rating benefit from implicit support from Assicurazioni
Generali S.p.A.
--- GENERALI FRANCE:
Moody's affirmed the Baa1 IFSRs of Generali Vie and Generali IARD (collectively,
"Generali France") -- the main operating companies
of the Generali Group in France -- the outlook on which
remains stable, reflecting the affirmation of Assicurazioni Generali
S.p.A's ratings. The Baa1 IFSR of the Generali
France entities reflects their good franchise in the French market,
diversified business model and distribution capabilities, along
with improving profitability and capitalisation. Even though Generali
France has only modest direct exposure to Italian bonds or the Italian
economy, Moody's believes that the credit profile of these operations
are linked to, and constrained by the Generali Group overall,
mainly through the Group's financial flexibility and franchise,
but also our expectation that Generali France would provide support to
other group entities in the event of stress.
--- GENERALI DEUTSCHLAND AG:
Moody's affirmed the A3 IFSRs of Generali Deutschland AG and its main
operations (see list below), the outlook on which remains stable,
reflecting the affirmation of Assicurazioni Generali S.p.A's
ratings.
Moody's believes that Generali Deutschland's credit profile
is also linked to, and constrained by the Generali Group overall.
However, the IFSR of Generali Deutschland is one notch above that
of Assicurazioni Generali S.p.A as Moody's believes that
the potential contagion risk from the Generali Group's Italian exposure
is more contained and lower for the German operations than for the French.
In particular, the German operations' credit profile is protected
by (1) the high proportion of business accessed through exclusive distribution
arrangements with affiliated entities relative to Generali in France;
and (2) sizeable capital in the form of free RfB and terminal bonus notwithstanding
the agreed sale of Generali Leben which represents around 40% of
this capital. Furthermore, Generali's German operations will
continue to operate a multi-brand strategy albeit to a much lesser
extent with the proposed merger of the AachenMuenchener and Central brands
into a unified Generali brand, and Generali's German operations
have limited direct exposure to Italian bonds and the Italian economy.
--- ALLIANZ S.P.A.:
Moody's confirmed Allianz S.p.A.'s IFSR
at A3 and changed the outlook to stable from Rating under Review;
this concludes the review initiated on 30 May. Moody's recognises
Allianz S.p.A. (Allianz Italy)'s elevated direct
exposure to Italian sovereign risk in terms of both its investment portfolio
(32% thereof consisting of Italian government bonds at year-end
2017) and its business profile (100% premiums and earnings sourced
from Italy in 2017). However, following the downgrade of
the Italian government debt, Moody's has increased to three notches
from two the IFSR of Allianz Italy above the Italian sovereign rating,
reflecting the expectation of parental support if required and the company's
exceptional operating performance.
Allianz Italy has consistently and materially outperformed the Italian
P&C market with combined ratios below 86% since 2012,
which contributed to a very high 14.4% Return on Capital
(5-year average basis at year-end 2017). The company
is also reducing its exposure to traditional life insurance operations
with premiums sourced from unit-linked business accounting for
about 83% of total life premiums in 2017. The latter supports
the expectation of a further decrease in exposure to Italian Government
bonds in the years to come.
Allianz Italy is 100% owned by Allianz SE, which is rated
Aa3 IFSR with a stable outlook. With the exception of Germany,
Italy was the country generating the largest amount of gross premium written
for Allianz SE in 2017, and Allianz Italy has consistently been
one of Allianz group's larger contributors in terms of operating profits.
As a consequence, Moody's believes that Allianz SE would very likely
provide support to its Italian operations in case of need.
--- UNIPOLSAI ASSICURAZIONI S.P.A.
AND UNIPOL GRUPPO S.P.A.:
Moody's downgraded UnipolSai Assicurazioni S.p.A.'s
IFSR to Baa3 from Baa2, and Unipol Gruppo S.p.A.'s
senior unsecured debt rating to Ba2 from Ba1 and changed the outlooks
to stable from Rating under Review; this concludes the review initiated
on 30 May. The downgrade reflects the above mentioned sovereign
rating action on Italy and the insurer's material direct exposure to Italian
sovereign risk in terms of both investment portfolio and business profile.
The stable outlook mirrors the outlook on Italy's Baa3 government
bond rating. At half-year 2018, Italian government
bonds represented approx. 45% (EUR 24.8 billion at
book value) of Unipol Gruppo's consolidated investment portfolio and around
370% of the group reported shareholders' equity. In addition
to material asset exposure to Italy, operating exposure results
from UnipolSai Assicurazioni S.p.A. sourcing close
to 100% of its premiums in Italy. Notwithstanding the adequate
intrinsic fundamentals of the insurer, with notably a good market
position and good P&C profitability in recent years, Moody's
constrains the IFSR at the level of Italy's sovereign rating.
WHAT COULD MOVE THE RATINGS UP/DOWN
--- ASSICURAZIONI GENERALI S.P.A
Upwards pressure could develop on Generali's ratings in case of (i) an
improvement in the credit quality of Italy, as evidenced by an upgrade
of Italy's sovereign rating, and (ii) a continued improvement of
the group's solvency and a reduction in exposure to Italian assets.
Conversely, downwards pressure could develop in case of (i) a further
deterioration in the credit quality of Italy, as evidenced by a
downgrade of Italy's sovereign rating, (ii) a material deterioration
of solvency or a significantly higher exposure to Italian assets,
(iii) a deterioration in operating performance also resulting in a deterioration
in the group's financial flexibility, or (iv) a deterioration in
the cash flows at the holding, for example with a significant reduction
in the cash flow coverage (available cash flows over holding interests
and expenses) below 2x.
A deterioration in the stand-alone credit quality of Generali's
French or German operations would also place downwards pressure on Assicurazioni
Generali S.p.A and Generali Italia S.p.A.'s
ratings.
--- GENERALI ITALIA S.P.A.
Upwards pressure could develop on Generali Italia's ratings in case
of an improvement in the credit profile of Generali Italia's parent company,
Assicurazioni Generali, as evidenced by an upgrade of its insurance
financial strength rating.
Conversely, downward pressure could develop in case of (i) a further
deterioration in the credit profile of Italy, as evidenced by a
downgrade of Italy's sovereign rating, which would exert pressure
on the credit profile of Generali Italia's parent company, or (ii)
a deterioration in the credit quality of the entire Generali group,
which would reduce the support expected to be available for Generali Italia
in stress scenarios.
--- GENERALI FRANCE
Upwards pressure could develop on Generali France's ratings in case
of an improvement in the credit profile of Generali France's parent company,
Assicurazioni Generali S.p.A, as evidenced by an upgrade
of its insurance financial strength rating.
Conversely, downward pressure could develop in case of (i) a further
deterioration in the credit profile of Italy, as evidenced by a
downgrade of Italy's sovereign rating or (ii) a weakening of the stand-alone
business profile as evidenced by a substantial erosion of Generali's market
position in France, a higher business risk profile, a material
deterioration in operating performance or a weaker solvency position of
Generali France.
--- GENERALI DEUTSCHLAND
Upwards pressure could develop on Generali Deutschland's ratings
in case of an improvement in the credit profile of Generali Deutschland's
parent company, Assicurazioni Generali S.p.A,
as evidenced by an upgrade of its insurance financial strength rating.
Conversely, downward pressure could develop in case of (i) a further
deterioration in the credit profile of Italy, as evidenced by a
downgrade of Italy's sovereign rating, or (ii) a deterioration of
solvency and operating performance of the operating companies in Germany.
--- ALLIANZ S.P.A.
Upwards pressure could develop on Allianz S.p.A.'s
ratings in case of an improvement in the credit quality of Italy,
as evidenced by an upgrade of Italy's sovereign rating.
Conversely, downwards pressure could develop in case of (i) a further
deterioration in the credit quality of Italy, as evidenced by a
downgrade of Italy's sovereign rating, (ii) a change in the
strategic importance of the company within the Allianz group or (iii)
a material deterioration in company earnings, operating performance
or capitalisation levels.
--- UNIPOLSAI ASSICURAZIONI S.P.A.
AND UNIPOL GRUPPO S.P.A.:
Upwards pressure could develop on UnipolSai Assicurazioni S.p.A.'s
and Unipol Gruppo S.p.A.'s ratings in case
of an improvement in the credit quality of Italy, as evidenced by
an upgrade of Italy's sovereign rating.
Conversely, downwards pressure could develop in case of (i) a further
deterioration in the credit quality of the Italian sovereign, as
evidenced by a downgrade of Italy's sovereign rating (ii) any significant
loss of market share, or (iii) a material deterioration in earnings,
operating performance or capitalisation levels, or (iv) any significant
increase in asset impairments or expenses, including in case of
unfavourable resolution of pending legal trials.
LIST OF AFFECTED RATINGS
Issuer: Allianz S.p.A.
..Confirmation:
....Insurance Financial Strength Rating,
confirmed A3
..Outlook Action:
....Outlook changed to Stable from Rating
under Review
Issuer: Unipol Gruppo S.p.A.
..Downgrades:
....Long-term Issuer Rating,
downgraded to Ba2 from Ba1
....Senior Unsecured Regular Bond/Debenture,
downgraded to Ba2 from Ba1
....Senior Unsecured Medium-Term Note
Program, downgraded to (P)Ba2 from (P)Ba1
..Outlook Actions:
....Outlook changed to Stable from Rating
under Review
Issuer: UnipolSai Assicurazioni S.p.A.
..Downgrades:
....Insurance Financial Strength Rating,
downgraded to Baa3 from Baa2
....Senior Unsecured Medium-Term Note
Program, downgraded to (P)Ba1 from (P)Baa3
....Subordinate Regular Bond/Debenture,
downgraded to Ba2(hyb) from Ba1(hyb)
....Subordinate Medium-Term Note Program,
downgraded to (P)Ba2 from (P)Ba1
....Junior Subordinated Regular Bond/Debenture,
downgraded to Ba3(hyb) from Ba2(hyb)
..Outlook Actions:
....Outlook changed to Stable from Rating
under Review
Issuer: Unipol Assicurazioni S.p.a.
..Downgrades:
....Backed Subordinate Regular Bond/Debenture,
downgraded to Ba2(hyb) from Ba1(hyb)
..No Outlook assigned
Issuer: Assicurazioni Generali S.p.A
..Affirmations:
....Insurance Financial Strength Rating,
affirmed Baa1
....Senior Unsecured Regular Bond/Debenture,
affirmed Baa2
....Senior Unsecured Medium-Term Note
Program, affirmed (P)Baa2
....Senior Subordinated Regular Bond/Debenture,
affirmed Baa3(hyb)/Baa3
....Senior Subordinate Medium-Term
Note Program, affirmed (P)Baa3
....Junior Subordinated Regular Bond/Debenture,
affirmed Ba1(hyb)
....Preferred Stock, affirmed Ba1(hyb)
..Outlook Action:
....Outlook remains Stable
Issuer: Generali Deutschland AG
..Affirmation:
....Insurance Financial Strength Rating,
affirmed A3
..Outlook Actions:
....Outlook remains Stable
Issuer: AachenMuenchener Lebensversicherung AG
..Affirmation:
....Insurance Financial Strength Rating,
affirmed A3
..Outlook Action:
....Outlook remains Stable
Issuer: AachenMuenchener Versicherung AG
..Affirmation:
....Insurance Financial Strength Rating,
affirmed A3
..Outlook Action:
....Outlook remains Stable
Issuer: Advocard Rechtschutzversicherung AG
..Affirmation:
....Insurance Financial Strength Rating,
affirmed A3
..Outlook Action:
....Outlook remains Stable
Issuer: Central Krankenversicherung AG
..Affirmation:
....Insurance Financial Strength Rating,
affirmed A3
..Outlook Action:
....Outlook remains Stable
Issuer: Cosmos Lebensversicherungs-AG
..Affirmation:
....Insurance Financial Strength Rating,
affirmed A3
..Outlook Action:
....Outlook remains Stable
Issuer: Cosmos Versicherung AG
..Affirmation:
....Insurance Financial Strength Rating,
affirmed A3
..Outlook Action:
....Outlook remains Stable
Issuer: Dialog Lebensversicherungs-AG
..Affirmation:
....Insurance Financial Strength Rating,
affirmed A3
..Outlook Action:
....Outlook remains Stable
Issuer: Envivas Krankenversicherung AG
..Affirmation:
....Insurance Financial Strength Rating,
affirmed A3
..Outlook Action:
....Outlook remains Stable
Issuer: Generali Deutschland Pensionskasse AG
..Affirmation:
....Insurance Financial Strength Rating,
affirmed A3
..Outlook Action:
....Outlook remains Stable
Issuer: Generali Versicherung AG
..Affirmation:
....Insurance Financial Strength Rating,
affirmed A3
..Outlook Action:
....Outlook remains Stable
Issuer: Generali IARD
..Affirmation:
....Insurance Financial Strength Rating,
affirmed Baa1
..Outlook Action:
....Outlook remains Stable
Issuer: Generali Vie
..Affirmation:
....Insurance Financial Strength Rating,
affirmed Baa1
..Outlook Action:
....Outlook remains Stable
Issuer: Generali Italia S.p.A.
..Affirmation:
....Insurance Financial Strength Rating,
affirmed Baa1
..Outlook Actions:
....Outlook remains Stable
PRINCIPAL METHODOLOGIES
The methodologies used in rating Allianz S.p.A.,
Unipol Gruppo S.p.A., UnipolSai Assicurazioni
S.p.A., Unipol Assicurazioni S.p.A.,
Assicurazioni Generali S.p.A., Generali Deutschland
AG and Generali Italia S.p.A. were Life Insurers
published in May 2018, and Property and Casualty Insurers published
in May 2018. The principal methodology used in rating AachenMuenchener
Lebensversicherung AG, Cosmos Lebensversicherungs-AG,
Dialog Lebensversicherungs-AG, Generali Deutschland Pensionskasse
AG and Generali Vie was Life Insurers published in May 2018. 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 Property and Casualty Insurers
published in May 2018. Please see the Rating 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.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
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 rating analyst and the Moody's legal entity that has issued
the ratings.
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.
Dominic Simpson
VP - Senior Credit Officer
Financial Institutions Group
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454
Antonello Aquino
Associate Managing Director
Financial Institutions Group
JOURNALISTS: 44 20 7772 5456
Client Service: 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
Client Service: 44 20 7772 5454
