Fitch Revises Societa Reale Mutua di Assicurazioni's Outlook to Stable; Affirms IFS at 'BBB+'

Fri May 2, 2014 9:50am EDT

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(The following statement was released by the rating agency) LONDON, May 02 (Fitch) Fitch Ratings has revised Italian insurer Societa Reale Mutua di Assicurazioni's (RMA) and its core Spanish subsidiary Reale Seguros Generales's (Reale Seguros) Outlook to Stable from Negative. At the same time, Fitch has affirmed these entities's Insurer Financial Strength (IFS) ratings at 'BBB+'. KEY RATING DRIVERS The rating action follows the Outlook revision of the rating of Italy (see "Fitch Revises Italy's Outlook to Stable, Affirms at 'BBB+' ", dated 25 April 2014) and the upgrade of Spain's Long-term IDR to 'BBB+' from 'BBB' (see "Fitch Upgrades Spain to 'BBB+'; Outlook Stable", dated 25 April 2014). RMA mainly operates in Italy and achieves some international diversification with its operations by means of Reale Seguros in Spain. Fitch considers RMA's investment policy as prudent, with few high-risk assets and generally a well-diversified portfolio. However, the insurer's investments continue to include substantial exposure to Italian sovereign debt (EUR4.3bn or 2.3x consolidated shareholders' funds at June-2013), to match Italian liabilities, a common feature among Italian insurers. As a result RMA's group ratings are constrained by the rating of Italy. RATING SENSITIVITES An upgrade of Italy's rating would lead to an upgrade of RMA's and Reale Seguros' ratings. A downgrade of Italy could lead to a downgrade of RMA and Reale Seguros. Other key rating triggers for a downgrade include the group's combined ratio deteriorating to above 105% (end-June 2013: 93%), the consolidated regulatory solvency ratio falling below 150% (end-June 2013: 207%), and significant investment losses triggered by a deterioration in the Italian economy. Contacts: Primary Analyst Federico Faccio Senior Director +44 20 3530 1394 Fitch Ratings Limited 30 North Colonnade London E14 5GN Secondary Analyst Clara Hughes Senior Director +44 20 3530 1249 Committee Chairperson Chris Waterman Managing Director +44 20 3530 1168 Media Relations: Hannah Huntly, London, Tel: +44 20 3530 1153, Email: hannah.huntly@fitchratings.com. Additional information is available at www.fitchratings.com. Applicable criteria, 'Insurance Rating Methodology', dated 11 January 2013, are available at www.fitchratings.com. Applicable Criteria and Related Research: Insurance Rating Methodology here Additional Disclosure Solicitation Status null/gws/en/disclosure/solicitation?pr_id=828561 ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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