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Fitch Ratings : Generali’s non-core German subsidiaries affirmed

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Generali Deutschland Group’s (GDG) three German non-core subsidiaries affirmed by Fitch Ratings :

– Advocard Rechtsschutzversicherung AG (Advocard; non-life insurer): Insurer Financial Strength (IFS) Rating affirmed at ‘A+’, Outlook Stable.

– Dialog Lebensversicherungs-AG’s (Dialog Leben; life insurer) IFS Rating affirmed at ‘A+’, Outlook Stable.

– Envivas Krankenversicherung AG’s (Envivas; health insurer) IFS Rating affirmed at ‘A-‘, Outlook Stable.

The affirmations reflect Fitch’s view of the importance of the insurers to GDG as well as their strong stand-alone capital levels and sound operating performance. Advocard is viewed by Fitch, under the agency’s group rating methodology, as “very important” to GDG due to its position as the only legal expense insurer in the group as well as having strong ties to the group through the products it offers and its use of the main Generali distribution network. Dialog Leben and Envivas are considered by Fitch to be “important” to GDG. Their strategic category under Fitch’s group rating methodology is limited due to their small absolute and relative size, reliance on sales channels outside the main Generali distribution network and the specialist nature of their businesses.

GDG is viewed by Fitch as a core part of Assicurazioni Generali with a Long-term Issuer Default Rating at ‘A+’ and IFS Rating at ‘AA-‘, both with Negative Outlook.

Key rating drivers for either an upgrade or a downgrade of Advocard, Dialog Leben and Envivas would be a rating change of the Generali group or if Fitch were to alter its view of the strategic importance of the rated insurers relative to the group.

Advocard is a legal expense insurer with 2010 gross written premiums (GWP) of EUR196.9m (2009: EUR192.4m) and total assets of EUR382.4m (2009: EUR406.5m). In 2010, the insurer reported a strong and stable combined ratio of 94%, unchanged from 2009 and a small decline in net income to EUR14.0m (2009: EUR16.5m). Dialog Leben is a life insurer that specialises in term and disability insurance and distributes its products exclusively via independent financial advisors. In 2010, the company reported GWP of EUR209.0m (2009: EUR198.8m) and total assets of EUR549.8m (2009: EUR518.9m). In the current low interest environment, the insurer benefits from its favourable business mix with strong technical and expense results. Envivas is a fast growing, but still relatively small health insurer with 2010 GWP of EUR54.9m (2009: EUR42.3m) and total assets of EUR59.3m (2009: EUR42.6m).

GDG operates under a multi-brand strategy with a variety of distribution channels to specifically target individual customer groups. In Fitch’s view, the group is well positioned due to its focused strategy combined with its improved cost efficiency and underlying profitability, particularly in the non-life segment. The rated insurers benefit from reinsurance from the holding company Generali Deutschland Holding AG as well as IT and asset management services which are provided via service companies. There are control and profit and loss transfer agreements in place between Generali Deutschland Holding AG and each of the rated entities.

Source : Fitch Ratings Press Release