Ratings agency AM Best has upgraded the Financial Strength Rating (FSR) of Assicurazioni Generali S.p.A. (Generali) (Italy) and its main rated subsidiaries to A+ (Superior) from A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) to “aa-” (Superior) from “a+” (Excellent).
Concurrently, Generali’s Long-Term Issue Credit Ratings (Long-Term IRs) of debt instruments issued or guaranteed has been upgraded, with the outlook of the credit ratings being stable.
AM Best stated these changed ratings reflect Generali’s balance “very strong” sheet strength, its strong operating performance, very favourable business profile and appropriate enterprise risk management.
AM Best details that Generali’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), was at the strongest level at year-end 2023. Furthermore, the group reported a Solvency II SCR ratio of 209% as of 30th September 2024 and year-end 2023 is 220%.
Generali’s reduction in exposure to Italian sovereign bonds in recent years has rendered the group’s regulatory solvency and risk-adjusted capitalisation levels to be less sensitive to movements in spreads of Italian sovereign bonds. With the weight of these bonds decreasing from the group’s balance sheet from €63 billion in 2019 to €39 billion in 2023.
However, the exposure remains significant and will continue to be an offsetting factor in the company’s balance sheet strength assessment, noted AM Best.
Taking a look at Generali’s operating performance, which is driven by solid technical performance. The group’s technical results are underpinned by its non-life business, which produced a discounted combined ratio of 94% in 2023, life technical margins (present value of new business premiums) remained strong, increasing slightly to 5.78% at year-end 2023.
The group’s net outflows in life business in 2023 was reported at €1.3 billion as a result of the uptick in interest rates. Outflows on traditional savings products were largely offset by inflows on separate account business (Unit-Linked) and life protection.
AM Best stated, “Management has taken action to correct the situation, and the group has reported net inflows in life business of €6.8 billion at the end of the third quarter of 2024.”
Generali’s has maintained its business profile by leading and defensible positions in its core markets. It has a solid franchise, reinforced by its excellent access to markets through its proprietary network and multichannel distribution strategy.
Generali has continued to develop its position in core markets through acquisitions, most notably with the acquisition of Liberty Seguros in 2023, concluded AM Best.
