NOTE: On September 27, 2012 the press release was revised as follows: Added missing (hyb) indicator for Unipol Assicurazioni S.p.A. hybrid subordinated debt rating of Ba1. Revised release follows.
London, 17 July 2012 -- Moody's Investors Service has today announced the following actions on
three Italian insurance groups and related entities:
- Assicurazioni Generali S.p.A. and subsidiaries
(see debt list below): parent company insurance financial strength
rating (IFSR) downgraded to Baa1 from A1 and senior debt to Baa2 from
A2, negative outlook; French subsidiaries' IFSRs downgraded
to Baa1 from A1; German subsidiaries' IFSRs downgraded to A3
from A1
- Allianz S.p.A.: IFSR downgraded to
A3 from A1, negative outlook
- Unipol Assicurazioni S.p.A.: IFSR
downgraded to Baa2 from A3 and remains on review for downgrade
Today's actions reflect the weakening of the Italian government's creditworthiness,
as indicated by Moody's downgrade of Italy's government bond ratings to
Baa2 from A3 on 13th July 2012. For more details on the rationale
for the sovereign downgrade, please refer to the press release http://www.moodys.com/research/Moodys-downgrades-Italys-government-bond-rating-to-Baa2-from-A3--PR_250567.
The downgrades reflect Moody's view that these insurance groups'
key credit fundamentals (asset quality, capitalisation, profitability
and financial flexibility) are correlated with -- and thus
linked to -- the economic and market conditions in Italy,
where they are domiciled and have significant operations.
However, Moody's notes that the IFSRs of both Assicurazioni
Generali S.p.A. and Allianz S.p.A.
remain above the sovereign rating, reflecting in the former the
significant geographical diversification of the Generali Group,
and in the latter the benefits of ownership from a strong parent (Allianz
SE, Aa3 IFSR, negative).
For additional information on insurance ratings, please refer to
the webpage containing Moody's related announcements http://www.moodys.com/eusovereign.
RATINGS RATIONALE
--- ASSICURAZIONI GENERALI S.P.A:
IFSR of Assicurazioni Generali downgraded to Baa1, negative outlook
Moody's has downgraded the IFSR of Assicurazioni Generali (Generali)
by three notches to Baa1, negative outlook, and all associated
debt ratings have similarly been downgraded by three notches. Moody's
says that the downgrade of Generali reflects the insurer's direct exposure
to Italian sovereign risk in terms of both investment portfolio and business
profile. As at year-end 2011, Italian government bonds
represented 19% (EUR46 billion) of Generali's total fixed-income
portfolio, or 253% of shareholders' equity (gross,
before policyholders' participation), and 29% of its
gross written premiums (GWP) were sourced in Italy in 2011.
As part of this action, Moody's reduced the notching differential
between Generali's IFSR and the Italian sovereign rating to one
notch from two notches. The one notch differential continues to
reflect the insurer's broad diversification and flexible product characteristics,
which serve to reduce the impact to the group from stress related to the
Italian sovereign. In particular, Generali group's non-Italian
businesses accounted for over 70% of GWP in 2011, and Moody's
believes that the risk-sharing mechanism of the insurer's Italian
life insurance products somewhat mitigates its exposure to Italian sovereign
credit risk.
This mechanism offers a relatively high ability to share asset losses
with policyholders by reducing future credited returns, given the
current spread between investment returns and average guarantees.
However, the positioning of the rating at one notch, rather
than the prior two notches, above the sovereign, reflects
Moody's view that as the Italian economic environment deteriorates
1) Generali's ability to share further asset losses with policyholders
diminishes with increasing investment losses across the portfolio and
reduced policy sales, and 2) Generali's domestic life businesses
become increasingly pressured by a weakening domestic economic environment.
Generali's negative outlook mirrors the negative outlook on Italy's government
bond rating and reflects the uncertainties around the economic and financial
environment in Italy.
--- GENERALI FRANCE : IFSRs downgraded to Baa1,
negative outlook
The IFSRs of Generali Vie and Generali IARD -- the main
operating companies of the Generali Group in France -- have
been downgraded by three notches to Baa1, negative outlook.
The downgrade of these operations mirrors the downgrade of the parent
company, Assicurazioni Generali S.p.A.,
even though Generali's French operations have little direct exposure
to Italian bonds or the Italian economy. For these operations,
Moody's believes that the contagion risk stemming from a weakening
of the Generali Group overall, mainly through pressure on the Group's
financial flexibility and franchise, increases the risk of outflows
and the knock-on effects on their profitability and capitalisation.
--- GENERALI DEUTSCHLAND : IFSRs downgraded
to A3, negative outlook
The IFSRs of Generali Deutschland's main operations (see list at
the end of the press release) have been downgraded by two notches to A3,
negative outlook. The downgrade of these operations also reflects
the downgrade of the parent company. However, Moody's
believes that the contagion risk induced by a weakening of the Generali
Group is lower for Generali's German operations than for its French
operations. Notably, Moody's says the broader challenges
within the Generali Group are mitigated for the German franchise due to
(i) Generali Deutschland has a multi-brand strategy (with around
40% of the business written under the AachenMuenchener brand and
15% of the business written under the CosmosDirekt brand);
and (ii) Generali Deutschland exerts a higher control of its distribution
networks, relative to Generali in France.
Moody's assigned a negative outlook to all the ratings of Generali's
insurance subsidiaries, mirroring the negative outlook on the parent
company.
--- ALLIANZ S.P.A.: IFSR
downgraded to A3, negative outlook
The IFSR of Allianz S.p.A. (Allianz Italy),
which is fully owned by Allianz SE, has been downgraded by two notches
to A3, negative outlook. Moody's says that the downgrade
of Allianz Italy reflects the insurer's direct exposure to Italian sovereign
risk in terms of both investment portfolio and business profile.
Italian government bonds represented around 60% of Allianz Italy's
total fixed-income portfolio, over 500% of shareholders'
equity, and 100% of its GWP were sourced in Italy in 2011.
Nonetheless, Moody's continues to rate Allianz Italy's IFSR two
notches above the Italian sovereign rating, reflecting the benefit
of potential parental support from Allianz SE. Allianz Italy is
the second-largest operation outside Germany for Allianz SE,
and is consistently one of the largest contributors in terms of premiums
and operating profit.
Allianz Italy's negative outlook mirrors both the negative outlook of
the parent company Allianz SE, as well that on Italy's Baa2 government
bond rating.
--- UNIPOL: IFSR downgraded to Baa2,
on review for further possible downgrade
The IFSR of Unipol Assicurazioni S.p.A. (Unipol)
has been downgraded by two notches to Baa2 (on review for further downgrade).
Moody's says that the downgrade of Unipol reflects the insurer's direct
exposure to Italian sovereign risk in terms of both investment portfolio
and business profile. As of year-end 2011, Italian
government bonds represented 47% (EUR7.1 billion) of Unipol's
total fixed-income portfolio and around 222% of shareholders'
equity, and 100% of its GWP were sourced in Italy in 2011.
As a result, Unipol's IFSR is constrained by Italy's sovereign rating.
Unipol's IFSR remains on review for further downgrade to reflect the risks
inherent in the Group's proposed acquisition of Fondiaria-SAI (unrated).
The review will focus on the analysis of (i) the capital strength of the
new group; (ii) the quality of the investment portfolio of the enlarged
group; (iii) the financial leverage of the enlarged group; (iv)
the quality of the reserves of Fondiaria Sai SpA; and (v) the execution
risk of integrating multiple large insurance operations. Additionally,
a further downgrade of Italy would likely prompt a downgrade of Unipol.
WHAT COULD MOVE THE RATINGS UP/DOWN
--- ASSICURAZIONI GENERALI S.P.A
Given the negative outlook on Generali's ratings, Moody's
says that upwards ratings pressure is currently limited.
Further downwards pressure on Generali's ratings could develop following
(i) a further downgrade of Italy's sovereign rating; (ii) a material
deterioration of the group's solvency and/or operating performance;
and/or (iii) material deterioration of the group's financial flexibility.
--- ALLIANZ S.P.A.
Given the negative outlook on Allianz Italy's ratings, Moody's
says that upwards ratings pressure is currently limited.
Further downwards pressure on Allianz Italy's ratings could develop
following (i) a downgrade of Italy's sovereign rating; (ii) a downgrade
of Allianz SE, or a change in the status of the company within the
German group; and/or (iii) material deterioration in the company's
standalone solvency, earnings, operating performance,
or capitalisation levels.
--- UNIPOL
Unipol's ratings are under review for possible downgrade,
and further downwards pressure on the ratings could develop in the event
that Moody's concludes that the proposed acquisition of Fondiaria-SAI
leads to a weakening in the Group's capital strength, investment
quality, financial leverage or reserve adequacy, as well as
due to the integration risks of the transaction. The rating could
also be pressurized by a further downgrade of Italy.
SUMMARY PROFILES OF AFFECTED GROUPS
Generali Assicurazioni S.p.A., headquartered
in Trieste, Italy, is a major international multi-line
insurer. It reported gross premiums written of EUR69.2 billion
in 2011, total assets of EUR453 billion and shareholders' equity
including minorities of EUR18.1 billion at 31 December 2011.
Allianz S.p.A., headquartered in Trieste,
Italy, is a major Italian multi-line insurer. It reported
gross premiums written of EUR7.7 billion, total assets of
EUR58.6 billion in 2011 and shareholders' equity including minorities
of EUR3.7 billion at 31 December 2011.
Unipol Gruppo Finanziario S.p.A., based in
Bologna, Italy, is the parent company of Unipol Assicurazioni
S.p.A. and Unipol Banca. Unipol Gruppo Finanziario
S.p.A. reported a consolidated net loss of EUR94
million in 2011, total assets of EUR39.6 billion and shareholders'
equity of EUR3.2 billion, as of 30 December 2011.
The following ratings were downgraded with a negative outlook:
Assicurazioni Generali S.p.A -- insurance
financial strength rating: to Baa1 from A1
Generali Deutschland Holding AG -- insurance financial strength
rating: to A3 from A1
AachenMuenchener Lebensversicherung AG -- insurance financial
strength rating: to A3 from A1
AachenMuenchener Versicherung AG -- insurance financial
strength rating: to A3 from A1
Generali Lebensversicherung AG -- insurance financial strength
rating: to A3 from A1
Generali Versicherung AG -- insurance financial strength
rating: to A3 from A1
Advocard Rechtschutzversicherung AG -- insurance financial
strength rating: to A3 from A1
Generali Deutschland Pensionskasse AG -- insurance financial
strength rating: to A3 from A1
Central Krankenversicherung AG -- insurance financial strength
rating: to A3 from A1
Cosmos Lebensversicherungs-AG -- insurance financial
strength rating: to A3 from A1
Cosmos Versicherung AG -- insurance financial strength rating:
to A3 from A1
Dialog Lebensversicherungs-AG -- insurance financial
strength rating: to A3 from A1
Envivas Krankenversicherung AG -- insurance financial strength
rating: to A3 from A1
Generali IARD -- insurance financial strength rating:
to Baa1 from A1
Generali Vie -- insurance financial strength rating:
to Baa1 from A1
Assicurazioni Generali S.p.A., --
Senior debt rating: to Baa2 from A2
Assicurazioni Generali S.p.A. -- Subordinated
debt rating: to Baa3 (hyb) from A3 (hyb)
Assicurazioni Generali S.p.A. -- Preferred
stock debt rating: to Ba1 (hyb) from Baa1 (hyb)
Generali Finance B.V. -- Senior debt rating:
to Baa2 from A2
Generali Finance B.V. -- Subordinated debt
rating: to (P) Baa3 from (P) A3
Generali Finance B.V. -- Preferred stock debt
rating: to Ba1 (hyb) from Baa1 (hyb)
Allianz S.p.A -- insurance financial strength
rating: to A3 from A1
The following ratings were downgraded and remain on review for possible
downgrade:
Unipol Assicurazioni S.p.A. -- insurance
financial strength rating to Baa2 from A3;
Unipol Assicurazioni S.p.A. -- subordinated
debt rating to Ba1 (hyb) from Baa2 (hyb);
Unipol Gruppo Finanziario SpA -- senior rating to Ba2 from
Baa3;
Unipol Gruppo Finanziario SpA -- senior MTN rating to (P)Ba2
from (P)Baa3;
Unipol Gruppo Finanziario SpA -- long term issuer rating
to Ba2 from Baa3.
METHODOLOGY USED
The methodologies used in these ratings were Moody's Global Rating Methodology
for Life Insurers published in May 2010, Moody's Global Rating Methodology
for Property and Casualty Insurers published in May 2010 and Moody's
Guidelines for Rating Insurance Hybrid Securities and Subordinated Debt
published in January 2010. Please see the Credit Policy 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 relevant 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 relevant regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support provider's credit rating. For provisional ratings,
this announcement provides relevant 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.
The subordinate debt 293905 of rated entity Unipol Assicurazioni S.p.a
was initiated by Moody's and was not requested by this rated entity.
The rated entities or their agents participated in the rating process.
The rated entities or their agents provided Moody's access to the
books, records and other relevant internal documents of these rated
entities.
The ratings have been disclosed to the rated entities or their designated
agents and issued with no amendment resulting from that disclosure.
Information sources used to prepare these rating are the following:
parties involved in the ratings, public information, and confidential
and proprietary Moody's Investors Service information.
Moody's considers the quality of information available on the rated
entities, obligations or credits satisfactory for the purposes of
issuing these ratings.
Moody's adopts all necessary measures so that the information it
uses in assigning the ratings is of sufficient quality and from sources
Moody's considers to be reliable including, when appropriate,
independent third-party sources. However, Moody's
is not an auditor and cannot in every instance independently verify or
validate information received in the rating process.
Moody's Investors Service may have provided Ancillary or Other Permissible
Service(s) to the rated entities or their related third parties within
the two years preceding the credit rating action. Please see the
special report "Ancillary or other permissible services provided
to entities rated by MIS's EU credit rating agencies" on the
ratings disclosure page on our website www.moodys.com for
further information.
The below contact information is provided for information purposes only.
Please see the issuer page on www.moodys.com for Moody's
regulatory disclosure of the name of the lead analyst and the office that
has issued the credit rating.
The relevant Releasing Office for each rating is identified under the
Debt/Tranche List section on the Ratings tab of each issuer/entity page
on moodys.com
Please see the ratings disclosure page on www.moodys.com
for general disclosure on potential conflicts of interests.
Please see the ratings disclosure page on www.moodys.com
for information on (A) MCO's major shareholders (above 5%) and
for (B) further information regarding certain affiliations that may exist
between directors of MCO and rated entities as well as (C) the names of
entities that hold ratings from MIS that have also publicly reported to
the SEC an ownership interest in MCO of more than 5%. A
member of the board of directors of this rated entity may also be a member
of the board of directors of a shareholder of Moody's Corporation;
however, Moody's has not independently verified this matter.
Please see Moody's Rating Symbols and Definitions on the Rating Process
page on www.moodys.com for further information on the meaning
of each rating category and the definition of default and recovery.
Please see ratings tab on the issuer/entity page on www.moodys.com
for the last rating action and the rating history.
The date on which some ratings were first released goes back to a time
before Moody's ratings were fully digitized and accurate data may not
be available. Consequently, Moody's provides a date that
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that is available to it. Please see the ratings disclosure page
on our website www.moodys.com for further information.
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.
Antonello Aquino
Senior Vice President
Financial Institutions Group
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
Simon Harris
MD - Financial Institutions
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 downgrades the ratings of three Italian insurance groups
