S&P Affirms Fondiaria-SAI ‘BBB-‘ Ratings

Standard & Poor’s Ratings Services announced that it has affirmed its “BBB-” counterparty credit and insurer financial strength ratings on Italian composite insurance group Fondiaria-SAI SpA, following a review. The outlook is stable.

“The ratings on Fondiaria-SAI are based on its strong competitive position as the leading domestic player in non-life, coupled with its strong earnings, S&P said. “The ratings are constrained, however, by the group’s still-weak balance sheet and high financial-risk tolerance.”

“Our stable outlook relies on the assumption that management will continue to focus on business fundamentals and on rebuilding its capital base,” stated S&P credit analyst Laura Santori. Any strategic moves are not expected to weaken the group’s capitalization further. A reduction in the capital base would lead to a review of the ratings.

“Fondiaria-SAI’s earnings are expected to improve marginally, as some of the synergies from the merger have still to materialize,” Santori added. The combined ratio is not expected to fall below the current level, and life contributions will likely remain minimal, given the bancassurance products’ very low margins.