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Fitch Ratings : sovereign crisis weighs on Italian insurers

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Fitch Ratings says in a newly published report that the Eurozone debt crisis, despite showing signs of stabilisation, will continue to threaten Italian insurers’ ratings in 2013. Italian insurers hold a significant amount of government and corporate debt in their investment portfolios and are exposed to the health of the Italian economy.

“Prospects for the Italian insurance market in 2013 are poor,” says Federico Faccio, Senior Director in Fitch’s Insurance team. “Consumers have less money to spend on insurance products, and competition from banks is intensifying in the savings and non-life insurance markets.”

“The positive pricing cycle for motor insurance is coming to an end and Fitch does not expect claims experience to further improve. This leads the agency to believe that any improvement in underwriting profitability in 2013 will be only marginal,” adds Faccio.

Life insurers suffered from higher policyholder surrender rates in 2011 as customers cashed in their policies to invest in high-yielding government debt. Although surrender rates reduced in H112, the risk remains that they could increase in the event of a further decline in asset values, triggering realised losses as assets are sold to meet surrender payments. While insurers are generally able to impose surrender penalty charges to mitigate this risk, some generations of products have guaranteed surrender values which have to be satisfied on early redemption.

For further details, please see the report linked above “2013 Outlook: Italian Insurance Eurozone Debt Crisis Set to Drive Profitability and Capital Adequacy”.

Fitch will hold a teleconference to discuss the main findings described in the report. Details of the call will be announced shortly.

Fitch’s insurance analysts will visit Milan on 20 November 2012 to give presentations on the Italian insurance market, the global reinsurance market and the impact of the eurozone crisis on insurers. Please use the following link to register:


For further details on Fitch’s publications on the implications of the eurozone debt crisis for insurers, please see:

‘Eurozone Sovereign Risks – Impact on Insurers’ (February 2012)

‘European Insurers Capable of Withstanding Orderly Greek Exit – Contagion Poses the Bigger Threat’ (June 2012)