S&P Lowers Unipol’s Ratings to ‘A-‘

Standard & Poor’s Ratings Services announced that it has lowered its long-term counterparty credit and insurer financial strength ratings on Italy’s Compagnia Assicuratrice Unipol SpA. (Unipol) to ‘A-‘ from ‘A’ and removed them from CreditWatch, where they had been placed on June 23, 2003. It has also assigned them a “stable” outlook.

“The ratings action reflects Unipol’s weakened capitalization due to the price paid for recent acquisitions, including Winterthur Italia, and the growing amount of capital allocated to, and locked in, its banking activities,” stated S&P credit analyst Antonello Aquino. “This focus on retail and, to a lesser extent, commercial banking is expected to increasingly alter the group’s risk profile,” he continued.

“Nevertheless, the ratings on Unipol remain supported by its strong business position and operating performance, as well as by its strong financial flexibility,” Aquino added.

S&P said it “believes that Unipol will maintain its strong business position in the Italian insurance market. Capitalization is not expected to improve in 2003, though it should reach a level appropriate for the current rating in the short- to medium-term. Unipol’s earnings continue to improve and higher profit retention from 2004 onward is anticipated. Standard & Poor’s expects Unipol to manage its banking risk conservatively and will carefully monitor the group’s plans to engage in banking not only as an ancillary product to insurance, but also to develop a new lending business.”