A.M. Best Affirms Ratings of Assicurazioni Generali S.p.A. and Its Main Subsidiaries

  A.M. Best Affirms Ratings of Assicurazioni Generali S.p.A. and Its Main
  Subsidiaries

Business Wire

LONDON -- August 9, 2013

A.M. Best Europe – Rating Services Limited has affirmed the financial strength
rating of A (Excellent) and issuer credit ratings (ICR) of “a” of
Assicurazioni Generali S.p.A. (Generali) (Italy) and its main subsidiaries. At
the same time, A.M. Best has affirmed the ratings of debt instruments issued
or guaranteed by Generali. The outlook for all ratings remains negative. (See
below for a detailed listing of the companies and ratings.)

The ratings reflect the group’s very strong business position, resilient
operating performance and improving risk-adjusted capitalisation. Offsetting
factors include the sensitivity of the group’s risk-adjusted capitalisation to
financial market volatility and profitability pressures arising from the
challenging macroeconomic environment in its key markets. The negative outlook
reflects Generali’s exposure to the financial markets in Italy.

Generali is one of the largest insurers in Europe with a very strong franchise
in both life and non-life insurance within its core markets, namely Italy,
Germany and France, which contributed over 70% of gross written premium in
2012. The Central and Eastern Europe (CEE) markets remain important and a
source of future growth, as attested by the acquisition by Generali of an
extra 25% stake in Generali PPF Holding (GPH) in March of this year, giving
Generali management control of the entity. In 2012, the group reported
increased gross written premium of EUR 69.6 billion. Premium revenue is likely
to grow marginally in the next few years as challenging market conditions
prevail in Generali’s core markets.

The profitability of Generali has been resilient, albeit impacted by the
eurozone financial crisis in the last two years. Generali reported a reduced
net result of EUR 90 million in 2012, down from EUR 856 million in 2011,
mainly stemming from significant impairments following the asset review
conducted at the end of 2012 and the alignment of the group’s impairment
policy with market standards. Both life and non-life business segments
contributed to an increased operating result of EUR 4.2 billion (EUR 3.9
billion in 2011).

Generali’s risk-adjusted capitalisation recovered in 2012, benefitting from
increases in revaluation reserves of financial investments and recovery of the
Value of In Force (VIF), which A.M. Best gives partial credit for in its
Best’s Capital Adequacy Ratio (BCAR) model. In line with Generali’s strategic
plans, risk-adjusted capitalisation is expected to benefit from the disposals
of Generali U.S. Holdings,  and the minority stakes held in Seguros Banorte
Generali and Pensiones Banorte Generali, amongst others. However, Generali
continues to maintain sizeable exposures to peripheral eurozone sovereign
debt, mainly Italian, and eurozone financial institutions that make its
risk-adjusted capitalisation sensitive to investments in the financial
markets. The group’s capital resources would also be affected by the planned
acquisition of the remaining 24% stake of GPH.

In the context of the restructuring of the Italian operations, as at first
July this year, Generali has transferred the bulk of its primary insurance
business to the newly created Generali Italia S.p.A. Generali’s ratings are
not affected by the transaction, as the entity remains an operating holding
company, mainly acting as the group’s reinsurer.

Upward rating pressure is likely to be driven by lasting improvements to the
macroeconomic conditions in Southern Europe.

Negative rating pressure could arise if Generali’s risk-adjusted
capitalisation were to deteriorate materially, which could be as a result of
investment losses or a deterioration of the operating environment in
Generali’s key territories.

The FSR of A (Excellent) and ICRs of “a” have been affirmed for Assicurazioni
Generali S.p.A. and its following subsidiaries:

  *Generali Deutschland Holding AG
  *AachenMuenchener Lebensversicherung AG
  *AachenMuenchener Versicherung AG
  *Generali Lebensversicherung AG
  *Generali Versicherung AG
  *COSMOS Lebensversicherungs-AG
  *COSMOS Versicherung Aktiengesellschaft
  *Central Krankenversicherung Aktiengesellschaft
  *Generali Vie
  *Generali IARD

The ICR of “bbb” has been affirmed for Generali France S.A.

The following debt ratings have been affirmed:

Assicurazioni Generali S.p.A.—

-- “a-”on EUR 1,750 million 5.125% senior unsecured notes, due 2024

-- “a-” on EUR 750 million 4.875% senior unsecured notes, due 2014

-- “bbb+” on EUR 1,250 million 7.75% fixed/floating rate senior subordinated
callable notes, due 2042 (callable in 2022)

-- “bbb+” on EUR 750 million 10.125% fixed/floating rate senior subordinated
callable notes, due 2042 (callable in 2022)

-- “bbb+” on GBP 495 million 6.416% fixed/floating subordinated rate perpetual
debentures, callable in 2022

-- “bbb+” on GBP 350 million 6.269% fixed/floating subordinated rate perpetual
debentures, callable in

2026

Generali Finance B.V. (guaranteed by Assicurazioni Generali S.p.A.) —

-- “a-” on EUR 1,500 million 4.75% senior unsecured debentures, due 2014

-- “a-” on EUR 500 million 3.875% senior unsecured notes, due 2015

-- “bbb+” on EUR 1,250 million 5.479% fixed/floating subordinated rate
perpetual debentures, callable in 2017

-- “bbb+” on EUR 1,275 million 5.317% fixed/floating subordinated rate
perpetual debentures, callable in 2016

-- “bbb+” on GBP 700 million 6.214% fixed/floating subordinated rate perpetual
debentures, callable in

2016

The following indicative ratings on securities available under the EUR 10
billion medium-term note programme that was renewed in April of this year have
been affirmed:

Assicurazioni Generali S.p.A. and Generali Finance B.V.—

-- “a-” on all senior notes to be issued under the programme

-- “bbb+” on all subordinated and hybrid notes to be issued under the
programme

The methodology used in determining these ratings is Best’s Credit Rating
Methodology, which provides a comprehensive explanation of A.M. Best’s rating
process and contains the different rating criteria employed in the rating
process. Best’s Credit Rating Methodology can be found at
www.ambest.com/ratings/methodology.

In accordance with Regulation (EC) No. 1060/2009, the following is a link to
required disclosures: A.M. Best Europe - Rating Services Limited Supplementary
Disclosure.

A.M. Best Europe – Rating Services Limited is a subsidiary of A.M. Best
Company. A.M. Best Company is the world's oldest and most authoritative
insurance rating and information source. For more information, visit
www.ambest.com.

       Copyright © 2013 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

Contact:

A.M. Best Co.
Ghislain Le Cam, CFA
Senior Financial Analyst
+(44) 20 7397 0268
ghislain.lecam@ambest.com
or
Mahesh Mistry
Director
+(44) 20 7397 0325
mahesh.mistry@ambest.com
or
Rachelle Morrow
Senior Manager, Public Relations
+(1) 908 439 2200, ext. 5378
rachelle.morrow@ambest.com
or
Jim Peavy
Assistant Vice President, Public Relations
+(1) 908 439 2200, ext. 5644
james.peavy@ambest.com
 
Press spacebar to pause and continue. Press esc to stop.