Italian insurers' ratings cut as eurozone woes continue

Rating agency Moody’s has downgraded the financial strength ratings of three Italian insurers: Generali, Allianz’s Italian operation and Unipol.

The downgrades follow the lowering of Italy’s government bond ratings by two notches to Baa2 from A3 on 13 July.

Italy’s biggest insurer Generali’s group rating was cut three notches to Baa1 from A1. The insurer’s French subsidiaries’ ratings were lowered three notches to Baa1 from A1, while its German operations suffered a two-notch cut to A3 from A1. The ratings have a negative outlook.

Moody’s lowered Allianz SpA’s ratings by two notches to A3 from A1, with a negative outlook, and Unipol’s by two notches to Baa2 from A3. Unipol’s rating remains on review for a downgrade.

The rating agency said: “The downgrades reflect Moody’s view that these insurance groups’ key credit fundamentals (asset quality, capitalisation, profitability and financial flexibility) are correlated with — and thus linked to — the economic and market conditions in Italy, where they are domiciled and have significant operations.”

However,Moody’s added that both Generali and Allianz Italy’s ratings were higher than the sovereign rating because of Generali’s geographic diversification, and because of Allianz Italy’s financially strong parent group.

German insurance group Allianz is currently rated Aa3 by Moody’s with a negative outlook.