Industry Risk Analysis: Strong Fundamentals Should Help Italian Insurers Face Two Difficult Years

Standard & Poors, November 2010

Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.

Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.

Abstract
Conservative investment policy. Strong, although declining, new business margins in life insurance. Dominance of personal lines and limited exposure to long tail business and catastrophic risk in the property and casualty (P/C) business. Strong supervisory controls. Heightened economic and financial risk. Motor business hit a cyclical bottom in 2009. Mostly exclusively domestic players. Political intervention risk. In Standard & Poor's Ratings Services' view, Italian insurance companies have demonstrated resilient financial profiles in the past 18 months. However, we believe the sector faces tough challenges ahead as bleak economic prospects, low interest rates, and high capital market volatility hold back profitability, while structural regulatory changes reshape the competitive landscape. Italian insurers are preparing to face implementation of Solvency II--the EU's directive...

Companies mentioned in this report are: SIAT - Societa Italiana Assicurazioni e Riassicurazioni pA,Fondiaria-SAI SpA,Unipol Gruppo Finanziario SpA,Milano Assicurazioni SpA,Allianz SpA,Societa Cattolica di Assicurazione,INA ASSITALIA SpA,Euler Hermes SIAC SpA,UGF Assicurazioni SpA

SIAT - Societa Italiana Assicurazioni e Riassicurazioni pA,Fondiaria-SAI SpA,Unipol Gruppo Finanziario SpA,Milano Assicurazioni SpA,Allianz SpA,Societa Cattolica di Assicurazione,INA ASSITALIA SpA,Euler Hermes SIAC SpA,UGF Assicurazioni SpA

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