MOODY’S DOWN­GRADES THREE MA­JOR ITAL­IAN IN­SUR­ERS

[ Source: The Star, 18 July 2012 ]

Insurance - - INDUSTRY UPDATES -

Moody’s low­ered the credit rat­ing of three ma­jor Ital­ian in­sur­ers, adding more pres­sure on the euro zone’s third largest econ­omy af­ter a string of down­grades and a sov­er­eign down­grade in the sec­ond week of July. Italy has been a par­tic­u­lar fo­cus for rat­ings agen­cies in re­cent months as bor­row­ing costs on 10-year bonds have risen to about 6% fol­low­ing bailout deals for fel­low euro zone mem­bers, Spain and Greece. Gen­er­ali As­si­cu­razioni, Italy’s largest domestic in­surer and its sub­sidiaries were low­ered to Baal, while Unipol As­si­cu­razioni and Al­lianz Spa had rat­ings cut by two notches each. The down­grade of Gen­er­ali re­flects the in­surer’s di­rect ex­po­sure to Ital­ian sov­er­eign risk in terms of both in­vest­ment port­fo­lio and busi­ness pro­file. By the end of 2011, Ital­ian government bonds rep­re­sented 19% or 46 bil­lion eu­ros ($56.18 bil­lion) of Gen­er­ali’s to­tal fixed­in­come port­fo­lio, or 253% of share­hold­ers’ eq­uity. Government bonds con­sti­tute 47% of the fixed in­come port­fo­lio of Unipol As­si­cu­razioni with 222% of share­hold­ers’ eq­uity. All the in­sti­tu­tions men­tioned were given neg­a­tive out­looks.

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