Best Affirms Italy’s Società Cattolica ‘A’ Rating

A.M. Best Co. announced that it has affirmed the financial strength rating of “A” (Excellent) of Italy’s Società Cattolica di Assicurazione Coop. a R. L. with a stable outlook.

“The rating reflects Cattolica’s prospective excellent risk-adjusted capitalisation, excellent operating performance and distinctive business position in the Italian market,” said Best.

“Cattolica’s strong premium growth (anticipated five-year average to year-end 2004 is more than 30 percent) has placed consolidated risk-adjusted capitalisation under pressure,” Best noted. However the rating agency indicated that the “capital requirements associated with this growth are mitigated by the company’s stable account of lower volatility business (predominantly personal lines).” Best said it anticipates that the “premium growth will slow to approximately 10 percent in 2005, further alleviating pressure on risk-adjusted capitalisation.”

Best also said: “Cattolica is likely to continue recent significant improvements in profitability, with a stable double-digit return on capital anticipated over the next three years. Life business is likely to continue to make a substantial contribution to overall profitability, with performance enhanced as a result of a reduction in the company’s average minimum guarantee for traditional life products. Improvements in non-life technical performance are also likely due to the re-underwriting of the poorly performing motor account written by Cattolica’s subsidiary, Il Duomo Assicurazioni e Riassicurazioni S.p.A., using the parent company’s proven driver-customised tariff system (Duomo’s motor business is likely to represent approximately 25 percent of Cattolica’s non-life net premium in 2004).”