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Fitch Affirms SIAT's IFS Rating at 'BBB'; Outlook Stable
June 8, 2017 / 3:52 PM / 5 months ago

Fitch Affirms SIAT's IFS Rating at 'BBB'; Outlook Stable

(The following statement was released by the rating agency) LONDON, June 08 (Fitch) Fitch Ratings has affirmed Italy-based SIAT Societa Italiana Assicurazioni e Riassicurazioni p.A's Insurer Financial Strength (IFS) rating at 'BBB'. The Outlook is Stable. KEY RATING DRIVERS The rating reflects SIAT's moderate business profile in the Italian marine insurance market, its strong capital and its extensive reinsurance coverage. SIAT's IFS rating is constrained by Italy's sovereign rating (BBB/Stable) due to its large exposure to Italian sovereign debt. SIAT held EUR69 million (54% of total invested assets) of Italian sovereign bonds at end-2016, about the size of its shareholders funds. SIAT's unconstrained IFS rating is 'BBB+'. SIAT is the second-largest Italian marine insurer with a strong market position. However, with EUR133 million of gross premiums and EUR366 million of total assets at end-2016, it is small in size. Fitch views SIAT as strategically "important" to UnipolSai (BBB/Stable), as defined in its group rating methodology. UnipolSai provides control function, asset management and procurement services to SIAT. In turn SIAT provides UnipolSai with technical and operational services in the marine business, given its role of hub of competence for marine insurance within the UnipolSai group. SIAT has a strong capital base, as reflected in a Fitch Prism Factor Based Model (Prism FBM) score of "Extremely Strong" at end-2016. SIAT's regulatory Solvency II ratio, calculated according to the standard formula, was also strong at 170% at end-2016. SIAT has no financial debt, which Fitch views positively. We expect SIAT to maintain strong capitalisation. SIAT's reinsurance utilisation ratio is high. The ratio of net written premiums to gross written premiums remained stable at 31% in 2016. Fitch believes SIAT's high use of reinsurance is commensurate with the risks the company assumes and stabilises financial results. The counterparty credit risk is mitigated by the fact that all SIAT's reinsurers are rated in the 'A' category or above. SIAT's reinsurance programme is a factor supporting its rating and Fitch does not expect material changes in 2017. SIATs non-life combined ratio net of reinsurance deteriorated to 86% at end-2016 (2015: 85%), but remained well above the median for its rating category. SIAT's net income increased to EUR6.2 million in 2016 (2015: EUR5.4 million). SIAT's 2012-2016 average return on equity was 8%, a level in line with companies rated in the 'A' category. Fitch expects SIAT's net profitability to remain at least at this level in 2017 and the combined ratio to remain below 100% in the medium term. RATING SENSITIVITIES SIAT's rating would likely be downgraded if the ratings of Italy or UnipolSai are downgraded. Combined ratio deteriorating above 100% for a sustained period could also result in a downgrade. SIAT's rating would likely be upgraded if Italy and UnipolSai are upgraded, provided that SIAT maintains its adequate credit profile. Contact: Primary Analyst Federico Faccio Senior Director +44 20 3530 1394 Fitch Ratings Limited 30 North Colonnade London E14 5GN Secondary Analyst Nicola Caverzan Associate Director +44 20 3530 1642 Committee Chairperson Dr Stephan Kalb Senior Director +49 69 768076 118 Media Relations: Athos Larkou, London, Tel: +44 203 530 1549, Email: Additional information is available on Applicable Criteria Insurance Rating Methodology (pub. 26 Apr 2017) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here Solicitation Status here#solicitation Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. 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