AM Best Upgrades Credit Ratings for Assicurazioni Generali S.p.A.
In recent news, AM Best has made a significant upgrade to the credit ratings of Assicurazioni Generali S.p.A. (Generali), raising its Financial Strength Rating (FSR) to A+ (Superior) from A (Excellent). Additionally, the Long-Term Issuer Credit Ratings (ICR) have also been elevated to ‘aa-’ (Superior) from ‘a+’ (Excellent). This upgrade not only applies to Assicurazioni Generali but also extends to its principal subsidiaries, demonstrating a strong alignment in the group’s overall financial health. The outlook associated with these ratings remains stable.
Insights Into Generali’s Financial Strength
The recent upgrades from AM Best are indicative of the notable improvement in Generali’s balance sheet strength fundamentals. AM Best assesses Generali’s financial position as very robust, bolstered by its solid operating performance and its ability to manage enterprise risk effectively. The evaluation considered the company’s risk-adjusted capitalisation, which, according to Best’s Capital Adequacy Ratio (BCAR), maintained the strongest level at the close of the previous financial year.
Capital and Regulatory Solvency
As of the latest reports, the group reported a Solvency II SCR ratio of 209% while showing resilience in 2024 with a previous year-end figure of 220%. One of the vital factors influencing this rating is the company’s proactive reduction in exposure to Italian sovereign bonds over the years. This strategic maneuver has led to a lessened sensitivity to the fluctuations and spreads associated with Italian government bonds. To illustrate, the importance of these bonds on Generali's balance sheet diminished significantly, dropping from EUR 63 billion in 2019 to EUR 39 billion in 2023.
Operational Performance Highlights
Generali's robust financial ratings are complemented by its strong operational performance. The company’s technical operations showcased remarkable results; in 2023, the non-life business achieved a discounted combined ratio of 94.0%. The life insurance segment remained resilient, with strong technical margins reported at 5.78% by year-end 2023, compared to 5.69% the previous year. Even though net outflows in the life business hit EUR 1.3 billion in 2023 due to rising interest rates, the company’s diversified offerings in separate account business and life protection saw significant inflows. By the end of the third quarter of 2024, management reported net inflows in life business totaling EUR 6.8 billion, demonstrating recovery and strategic agility.
Generali’s Business Profile
The favorable business profile of Generali is largely attributed to its leading market positions and a defensible franchise within core markets. The company enjoys robust market access through a proprietary network supplemented by a multichannel distribution strategy. Recently, Generali has further solidified its market presence with significant acquisitions, including the notable acquisition of Liberty Seguros, which took place earlier this year, further enhancing its competitive edge.
Subsidiary Rating Upgrades
In line with the parent company’s upgrades, the following subsidiaries have also received an upgraded Financial Strength Rating to A+ (Superior) and Long-Term ICR to ‘aa-’ (Superior) for their strong operational profiles:
- Generali Italia S.p.A.
- Generali Deutschland AG
- Generali Vie S.A.
- Generali IARD S.A.
- Generali ?eská pojišt’ovna a.s.
- Generali España, Sociedad Anonima de Seguros y Reaseguros
- Generali Deutschland Versicherung AG
- Generali Deutschland Lebensversicherung AG
- Europ Assistance S.A.
Moreover, the Long-Term ICR of Generali France has improved to ‘a’ (Excellent) from ‘a-’ (Excellent), with a stable outlook.
Long-Term Issue Ratings Upgraded
The company’s Long-Term IRs have experienced positive upgrades, as seen with the following ratings:
For Assicurazioni Generali S.p.A.—
- Upgraded to ‘a’ (Excellent) from ‘a-’ on EUR 1,250 million 5.5% fixed/floating rate subordinated notes due 2047 (callable in 2027)
- Upgraded to ‘a’ (Excellent) from ‘a-’ on EUR 850 million 5% fixed/floating rate subordinated notes due 2048 (callable in 2028)
- Upgraded to ‘a’ (Excellent) from ‘a-’ on EUR 1,000 million 4.125% fixed rate subordinated notes due 2026
- Upgraded to ‘a’ (Excellent) from ‘a-’ for EUR 500 million 3.875% fixed rate subordinated notes due 2029
- Upgraded to ‘a’ (Excellent) from ‘a-’ for EUR 750 million 2.124% fixed rate subordinated notes due 2030
- Upgraded to ‘a-’ (Excellent) from ‘bbb+’ (Good) on GBP 350 million 6.269% fixed/floating rate junior perpetual debentures (callable in 2026)
- Upgraded to ‘a-’ (Excellent) from ‘bbb+’ (Good) on EUR 1,500 million 4.596% fixed/floating rate more deeply subordinated perpetual notes originally issued by Generali Finance B.V.
Additionally, indicative Long-Term IRs available under the EUR 15 billion medium-term note program have been upgraded with stable outlooks, reflecting improving investor confidence.
Conclusion
The upgrades from AM Best are not merely reflective of improved financial metrics but underscore an ongoing commitment by Assicurazioni Generali S.p.A. to enhancing value through strategic initiatives and sound financial practices. This uplifting narrative is anchored in a solid operational backbone and proactive risk management, paving the way for a promising outlook within the insurance sector.
Frequently Asked Questions
What ratings did AM Best upgrade for Generali?
AM Best upgraded Generali's Financial Strength Rating from A to A+ and the Long-Term Issuer Credit Ratings from A+ to aa-.
What factors influenced the rating upgrades?
The upgrades were influenced by Generali's strong balance sheet strength and solid operating performance, particularly in technical results and capitalisation.
How has Generali managed its sovereign bond exposure?
Generali reduced its exposure to Italian sovereign bonds significantly, decreasing from EUR 63 billion in 2019 to EUR 39 billion in 2023.
What are Generali's recent operational results?
In 2023, Generali achieved a combined ratio of 94.0% in its non-life business and reported strong technical margins in its life segment.
Are there further acquisitions planned by Generali?
Yes, Generali has been actively increasing its market presence through strategic acquisitions, such as Liberty Seguros in 2023.
