Moody’s upgrades outlook on Assicurazioni Generali to positive

Investing.com -- Moody’s Ratings has revised its outlook on Assicurazioni Generali (BIT:GASI) S.p.A (Generali) from stable to positive on May 28, 2025. The rating agency also affirmed Generali’s A3 insurance financial strength rating (IFSR). Similar changes were made to the outlooks of Generali’s main operating insurance subsidiaries in Italy, France, and Germany.

The alteration in Generali’s outlook is a response to Moody’s recent change in the Government of Italy’s outlook, which also shifted from stable to positive on May 23, 2025. Generali’s ratings are somewhat limited by the Italian sovereign rating due to the group’s operational and asset exposure to Italy, which is evident in Generali’s asset quality and capital.

Generali’s exposure to Italian government bonds remained relatively stable in 2024, accounting for 10% of its investments and 108% of its shareholders’ equity as of year-end 2024. The company generated 34% of its insurance premiums written and 31% of its insurance operating results from Italy.

Despite the exposure to Italian sovereign risk, Generali’s strong financial profile is reflected in its ratings. The company’s capitalization has remained stable over recent years, with a robust Solvency II ratio of 210% at year-end 2024. Generali’s adjusted financial leverage was at 20% at the end of 2024, and earnings coverage was at 10x in 2024. The company also reported strong earnings with a return on capital of around 7%, similar to 2023.

The IFSRs of the rated subsidiaries in Italy, France, and Germany align with the IFSR of the Group, reflecting the view that these entities’ business and financial profiles combined drive and benefit from the larger group’s financial strength. The positive outlooks on these companies reflect the positive outlook on the parent company.

Upward pressure on Generali’s ratings could result from an improvement in Italy’s credit quality, as evidenced by an upgrade of its sovereign rating, a continuation of its strong earnings track record, and maintenance of its Solvency II ratio firmly in excess of 200%. Conversely, downward pressure on the ratings could result from a weakening of Italy’s sovereign rating to non-investment grade, a prolonged deterioration in the group’s operating performance and capitalization, or a reduced cohesion of the group.

As the financial strength of Generali’s rated subsidiaries is closely intertwined with that of the larger Generali group, any change in Generali’s ratings or outlook will likely result in an equivalent change in the subsidiaries’ ratings or outlook. Their ratings could also face downward pressure from reduced cohesion in the group or if it becomes apparent that support mechanisms within the group weaken.

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