Fitch Ratings has assigned the Austrian insurer Generali Versicherung AG (Generali Versicherung) an Insurer Financial Strength (IFS) rating of ‘AA-‘ with a Stable Outlook.
The rating reflects Generali Versicherung’s strong market position and long-established franchise in the Austrian market as well as good underwriting performance, prudent investment profile and adequate capitalisation.
The rating further reflects Fitch’s view that Generali Versicherung is ultimately core to Assicurazioni Generali (rated IFS ‘AA-‘/Stable), its Italian parent company and the main operating entity of Generali group (Generali). Accordingly, Generali Versicherung’s IFS rating and Outlook have been aligned with those of Assicurazioni Generali, which equates to a one-notch uplift from Generali Versicherung’s standalone position.
Generali Versicherung’s core status is underpinned by the fact that the entity operates under the Generali brand and Generali’s management considers Austria, which is the historical home market of Generali, as a core market. Furthermore, Fitch views Generali’s Austrian entities as highly integrated in the group, in terms of organisational structure, risk management and strategy. These factors mean the agency views Generali Versicherung as core, despite the limited materiality of premiums and earnings generated in Austria, which represent about 4% of the group’s top- and bottom-line.
Generali Versicherung’s underwriting results have a positive track record, with a combined ratio of 92.6% in 2009 reported under Austrian local GAAP (2008: 94.4%). The reported combined ratio in Q32010 for the Austrian operations was 95.9% (IFRS accounting), which Fitch considers satisfactory in light of the partly deteriorating trading conditions in Austria, particularly in the motor segment, where Generali Versicherung is the market leader. Reserving policies appear prudent, with development from prior reserves largely favourable. Generali Versicherung’s capitalisation is adequate from a regulatory perspective as well as proving resilient to Fitch’s capital adequacy stress tests. Generali Versicherung generated 32% of its EUR2.2bn premiums in 2009 in the life segment where it sells mainly traditional life insurance products.
Generali Versicherung’s rating would be downgraded if the rating of its parent company Assicurazioni Generali is downgraded, and could be downgraded if the insurer loses its core status as a result of change in strategy on the Generali group level. Conversely, the ratings would be upgraded if the parent’s rating is upgraded.
Source : Fitch Ratings Press Release