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Rating: Fitch Affirms ‘A-‘ rating to Generali

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Fitch Ratings has affirmed the financial strength rating of Italian insurer Generali and its subsidiaries to ‘A-‘ credit rating and long-term “BBB +”, both with stable outlook.

Fitch Ratings confirmed late last week finacière strength rating of “A-” of Generali and all of its subsidiaries, with a stable outlook. The rating agency also confirmed the credit rating of long-term “BBB +” from Italian insurer, also with a stable outlook.

According to Fitch, Generali should continue to deliver solid operational performance in the coming months – particularly Casualty – while preserving capital and reducing its debt, thanks to its new governance. Nevertheless, “the capital of Generali is vulnerable to shocks due to its high exposure to Italian sovereign debt” (55Mds euros, or 2.8 times its consolidated equity at the end of 2013), tempers the rating agency. It also believes that significant levels of goodwill and intangible company “negatively affect the quality of its capital.”

Fitch believes, however, that the operations of assets incurred by Generali Worldwide 2015 (3.7Mds euros now) sales should allow the insurer to Trieste to strengthen its capital and repay its debt. Its leverage ratio (FLR) calculated by the rating agency reached 35% at end 2013. Insurer plans to reduce its debt of 1 billion euros by 2015, “therefore, Fitch s’ expected that the RPF falls below 35% in the medium term. ”

Fitch finally states that Generali notes could be downgraded if its consolidated Solvency I ratio falls below 120% on a sustainable basis, or if the consolidated leverage ratio remains equal to or greater than 35% over the next 12 to 18 months. Notes Generali are also likely to be downgraded if Italy is downgraded.