MOODY’S DOWNGRADES THREE MAJOR ITALIAN INSURERS
[ Source: The Star, 18 July 2012 ]
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.