Standard & Poor's has announced that its ratings on Italy-based insurer Societa Assicuratrice Industriale (SAI) and related entities remain on CreditWatch, with negative implications.
This reflects the uncertainties surrounding SAI's purchase of shares in composite insurer La Fondiaria Assicurazioni, and the contingent liability resulting from derivative arrangements that SAI has entered into with certain investors.
These investors have acquired 29% of La Fondiaria - SAI was unable to purchase this share due to regulatory obstacles.
SAI intends to merge with La Fondiaria. S&P commented: "In the event of a full merger in 2002, the ratings on SAI and related entities could be pressured by group solvency issues, which might emerge when insurance groups perform a consolidated margin calculation for the first time."
It added: "In the event of a merger, it is likely that SAI and La Fondiaria would consider external funding to alleviate these pressures."
S&P is in close contact with SAI and said it will remove the CreditWatch when all uncertainties are resolved.
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