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TEXT-S&P keeps Generali and subs ratings on watch negative
September 17, 2012 / 4:22 PM / 5 years ago

TEXT-S&P keeps Generali and subs ratings on watch negative

Overview
     -- In our view, Italy-based global multiline insurer Generali's upcoming 
new strategic plan, following its recent appointment of a new CEO, and its 
announced restructuring of its core market create uncertainties for Generali 
and its "core" subsidiaries (Generali group).
     -- In addition, we view the Generali group as bearing higher-than-peers' 
exposure to the weak Italian economy and domestic investment markets.
     -- We are therefore maintaining the ratings on the Generali group on 
CreditWatch negative.
     -- The CreditWatch reflects our view that there is material uncertainty 
regarding the outcome of Generali's new strategy and the resilience of its 
balance sheet to risk and volatility in the domestic operating, economic and 
financial environments

Rating Action
On Sept. 17, 2012, Standard & Poor's Ratings Services maintained its 
CreditWatch with negative implications on the 'A' long-term counterparty 
credit and insurer financial strength ratings on Italy-based insurer 
Assicurazioni Generali SpA (Generali) and its related "core"
subsidiaries (Generali group). We also maintained on CreditWatch negative our
'A-' counterparty credit rating on subsidiary Deutsche Bausparkasse Badenia AG,
our 'A' counterparty credit rating on Generali USA Life Reassurance Co., the 
'BBB+' counterparty credit ratings on Austria-based holding companies Generali 
Holding Vienna AG and Generali Rueckversicherung AG, and related issue 
ratings. The ratings were initially placed on CreditWatch negative on June 7, 
2012.

Rationale
The CreditWatch reflects our view that there is material uncertainty regarding 
Generali's strategy, following the appointment of its new CEO, Mario Greco, 
and its recent announcement of new management and potential reorganization in 
Italy. The CreditWatch also reflects our concerns about the higher-than-peers' 
exposure of the Generali group to the Italian economy, and domestic sovereign 
and financial investments. As of end-June 2012, Italian assets made up 23% of 
Generali's investments, or about three times its consolidated regulatory 
solvency capital.

We understand the new CEO has undertaken a full strategic and financial review 
of Generali. Given Generali's complex and wide reaching international 
structure, the strategic orientation of the new management could affect the 
Generali group's financial profile and business position. In particular, we 
will monitor the impact on the Generali group's future capitalization and its 
financial flexibility, which we view as the main rating weaknesses.

The ratings on Generali are higher than those on the Republic of Italy 
(BBB+/Negative/A-2 unsolicited ratings). According to our criteria, Generali's 
exposure to country risk in Italy remains below our threshold of 40% of assets 
or policyholder liabilities in its home market. Consequently, our criteria 
enables us to rate Generali up to three notches above the long-term rating on 
Italy (see "General Criteria: Nonsovereign Ratings That Exceed EMU Sovereign 
Ratings: Methodology And Assumptions," published on June 14, 2011). Italian 
policyholder liabilities represented 27% of total policyholder liabilities on 
June 30, 2012.

The ratings on the Generali group reflect our view of their very strong 
competitive position, solid operating performance, and sound liquidity. We 
view the Generali group's capitalization as a weakness for its credit quality 
and believe that current market conditions and reduced net profits compared 
with 2010 levels constrain the Generali group's financial flexibility.

CreditWatch 
The CreditWatch indicates our view that there is a one-in-two chance that we 
could lower the ratings on the Generali group, most likely by one notch. We 
expect to resolve or update the CreditWatch placement within the next three 
months, following our assessments of the impact of the new strategy, once 
announced, on the Generali group, and of its sensitivity to domestic country 
risk.

We could lower the ratings if we believe the new strategy is unlikely to lead 
to improvement in Generali's capitalization over the next year. We could also 
lower the ratings on some subsidiaries if our view of their strategic 
importance changes under the Generali group's new strategy. We could also 
lower the ratings if we believe that the Generali group's balance sheet 
appears less resilient to risk and volatility in the domestic operating, 
economic, and financial environments, given Generali's higher Italian country 
exposure than other global multiline insurers .

We could affirm the ratings on the Generali group if we believe that the new 
strategy is likely to strengthen Generali's future capitalization to a level 
in line with capital adequacy in the 'A' rating category according to our 
capital model, and the Generali group's balance sheet weathers the 
persistently high volatility and risks in Italy without a durable negative 
impact on its financial and business profiles.

Related Criteria And Research
     -- Group Methodology, April 22, 2009
     -- Holding Company Analysis, June 11, 2009
     -- Interactive Ratings Methodology, April 22, 2009
     -- Hybrid Capital Handbook: September 2008 Edition, Sept. 15, 2008
     -- Counterparty Credit Ratings And The Credit Framework, April 14, 2004
     -- Refined Methodology And Assumptions For Analyzing Insurer Capital 
Adequacy Using The Risk-Based Insurance Capital Model, June 7, 2010 
     -- Criteria Update: Factoring Country Risk Into Insurer Financial 
Strength Ratings, Feb. 11, 2003 
     -- General Criteria: Nonsovereign Ratings That Exceed EMU Sovereign 
Ratings: Methodology And Assumptions, June 14, 2011
     -- Use Of CreditWatch And Outlooks, Sept. 14, 2009

Ratings List
Ratings Remaining On CreditWatch

Assicurazioni Generali SpA
INA ASSITALIA SpA
Generali Vie
Generali Versicherung AG
Generali Versicherung AG
Generali USA Life Reassurance Co.
Generali Lebensversicherung AG
Generali IARD
Generali Deutschland Pensionskasse AG
Envivas Krankenversicherung AG
Cosmos Versicherung AG
Cosmos Lebensversicherungs AG
Central Krankenversicherung AG
Alleanza Toro S.p.A
Advocard Rechtsschutzversicherung AG
AachenMuenchener Versicherung AG
AachenMuenchener Lebensversicherung AG
 Counterparty Credit Rating
  Local Currency                        A/Watch Neg/--

Assicurazioni Generali SpA
INA ASSITALIA SpA
Generali Vie
Generali Versicherung AG
Generali Versicherung AG
Generali USA Life Reassurance Co.
Generali Lebensversicherung AG
Generali IARD
Generali Deutschland Pensionskasse AG
Generali (U.S. branch)
Envivas Krankenversicherung AG
Cosmos Versicherung AG
Cosmos Lebensversicherungs AG
Central Krankenversicherung AG
Alleanza Toro S.p.A
Advocard Rechtsschutzversicherung AG
AachenMuenchener Versicherung AG
AachenMuenchener Lebensversicherung AG
 Financial Strength Rating
  Local Currency                        A/Watch Neg/--     

Deutsche Bausparkasse Badenia AG
 Counterparty Credit Rating             A-/Watch Neg/A-2   
 Certificate Of Deposit                 A-/Watch Neg/A-2       

Generali Holding Vienna AG
Generali Rueckversicherung AG
 Counterparty Credit Rating
  Local Currency                        BBB+/Watch Neg/--  
 Financial Strength Rating
  Local Currency                        BBB+/Watch Neg/--  

Assicurazioni Generali SpA
 Senior Unsecured                       A-/Watch Neg       
 Subordinated                           BBB+/Watch Neg     
 Junior Subordinated                    BBB/Watch Neg      

Generali Finance B.V.
 Senior Unsecured*                      A-/Watch Neg       
 Junior Subordinated*                   BBB/Watch Neg      

*Guaranteed by Assicurazioni Generali SpA


Complete ratings information is available to subscribers of RatingsDirect on 
the Global Credit Portal at www.globalcreditportal.com. All ratings affected 
by this rating action can be found on Standard & Poor's public Web site at 
www.standardandpoors.com. Use the Ratings search box located in the left 
column.

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