Fitch Ratings says that Generali Espana, S.A. de Seguros Y Reaseguros (Generali Espana) and Reale Seguros Generales’ (Reale Seguros) ratings are not affected by the downgrade of Spain’s Long-term foreign and local currency Issuer Default Ratings (IDRs) to ‘BBB’ from ‘A’, with a Negative Outlook (see “Fitch Downgrades Spain to ‘BBB’; Outlook Negative” dated 7 June 2012 at www.fitchratings.com).
Generali Espana and Reale Seguros’ Insurer Financial Strength (IFS) ratings are ‘A-‘ and ‘BBB+’ respectively, both with a Negative Outlook. Generali Espana is a wholly owned subsidiary of Assicurazioni Generali SpA (Generali; IFS: ‘A-‘/Negative) and Reale Seguros of Mutua di Assicurazioni (Reale Mutua; IFS: ‘BBB+’/Negative.
Under Fitch’s methodology, both companies are considered core to their respective groups. Accordingly the IFS ratings are equal to the group’s IFS rating. This reflects Fitch’s belief that Generali and Reale Mutua would be able and willing to support their Spanish subsidiaries should the need arise.
Under Fitch’s ‘Insurance Rating Methodology’, insurance organisations can be rated above the local currency sovereign rating if they benefit from support by a strong foreign shareholder.
Generali Espana and Reale Seguros’ ratings could be downgraded if the financial profile of their respective group deteriorates leading to a downgrade of the parent company. This could be triggered by losses arising from exposure to Spanish bonds, or other European sovereign bonds, exceeding Fitch’s current expectations.
Generali Espana and Reale Seguros’ ratings could also be downgraded if Fitch’s view of the strategic importance of these entities to the respective group were to change.
