October 4, 2017 / 3:52 PM / a year ago

Fitch Downgrades Generali Leben IFS to 'BBB+'; Affirms Remaining Generali Core German Subsidiaries

(The following statement was released by the rating agency) LONDON, October 04 (Fitch) Fitch Ratings has downgraded Germany-based Generali Lebensversicherung AG (Generali Leben)'s Insurer Financial Strength (IFS) Rating to 'BBB+' (Good) from 'A-' (Strong). Generali Leben is ultimately owned by Italy-based Assicurazioni Generali SpA (Generali; IFS 'A-'/Stable). Fitch has also affirmed Generali's remaining core German subsidiaries' IFS Ratings at 'A-' (Strong). The Outlook on all ratings is Stable. A full list of rating actions is at the end of this commentary. Today's rating action follows Generali's announcement that Generali Leben will be put into run-off during 1Q18 and will cease writing new business. Under the new plan, the disposal of Generali Leben's portfolio is also a possibility. KEY RATING DRIVERS Following the announcement Fitch has revised its view of Generali Leben's strategic importance relative to Generali group to Limited Importance from Core as defined in the agency's insurance ratings methodology. This reflects our expectation of reduced synergies with the German operations of Generali in future and an increased probability of a disposal. The rating assigned to Generali Leben factors in both our stand-alone assessment in the 'BBB' category and the credit strength of the Generali group. The affirmation of the ratings of Generali's core German subsidiaries (other than Generali Leben) reflects the group's ongoing commitment to maintain a strong and well-established franchise and a leading market position in Germany. Under a new strategic plan, Generali aims to further streamline its operations in Germany, to strengthen its brands and to improve operational efficiency. Generali is the second-largest primary insurer in Germany by premiums, with EUR16.2 billion of gross written premiums in 2016 (Generali group: EUR70.5 billion). The German operations generated an operating result of EUR847 million in 2016, out of EUR4,830 million for the group as a whole. The ratings of Generali and its core non-German subsidiaries are unaffected by this announcement. RATING SENSITIVITIES Changes in Generali Leben's ownership could result in a rating action. A weakening of its credit profile, for example as a result of a disorderly run-off, could also result in a downgrade. Changes in Generali's rating will most likely lead to similar rating actions on Generali's core German subsidiaries. FULL LIST OF RATING ACTIONS Generali Lebensversicherung AG: IFS downgraded to 'BBB+' from 'A-'; Outlook Stable AachenMuenchener Lebensversicherung AG: IFS affirmed at 'A-'; Outlook Stable AachenMuenchener Versicherung AG: IFS affirmed at 'A-'; Outlook Stable Advocard Rechtsschutzversicherung AG: IFS affirmed at 'A-'; Outlook Stable Central Krankenversicherung AG: IFS affirmed at 'A-'; Outlook Stable Cosmos Versicherung AG: IFS affirmed at 'A-'; Outlook Stable Cosmos LebensversicherungsAG: IFS affirmed at 'A-'; Outlook Stable Dialog LebensversicherungsAG: IFS affirmed at 'A-'; Outlook Stable Generali Deutschland AG: IFS affirmed at 'A-'; Outlook Stable Generali Deutschland Pensionskasse AG: IFS affirmed at 'A-'; Outlook Stable Generali Versicherung AG: IFS affirmed at 'A-'; Outlook Stable Envivas Krankenversicherung AG: IFS affirmed at 'A-'; Outlook Stable Contact: Primary Analyst Nicola Caverzan Associate Director +44 20 3530 1642 Fitch Ratings Limited 30 North Colonnade London E14 5GN Secondary Analyst Harish Gohil Managing Director +44 20 3530 1257 Committee Chairperson Willem Loots Senior Director +44 20 3530 1808 Media Relations: Athos Larkou, London, Tel: +44 203 530 1549, Email: athos.larkou@fitchratings.com. 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