RPT-Fitch Revises Poste Vita's Outlook to Stable; Affirms IDR at 'BBB+'

Mon May 19, 2014 4:15am EDT

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May 19 (Reuters) - (The following statement was released by the rating agency)

Fitch Ratings has revised Italy-based insurer Poste Vita's Outlook to Stable from Negative. At the same time, Fitch has affirmed Poste Vita's Long-term Issuer Default Rating (IDR) at 'BBB+'. Fitch has also affirmed Poste Vita's subordinated notes at 'BBB(EXP)'.

KEY RATING DRIVERS

The rating action follows Fitch's recent revision of the Rating Outlook of Poste Italiane (Poste) (see "Fitch Revises Poste Italiane's Outlook to Stable; Affirms Rating at 'BBB+'", dated 16 May 2014), the Italian post office and Poste Vita's ultimate parent.

The rating action also follows Fitch's recent revision of the Rating Outlook of Italy (see "Fitch Revises Italy's Outlook to Stable, Affirms at 'BBB+' ", dated 25 April 2014).

Poste Vita distributes its insurance products through Poste's branches and its risk management is highly integrated within Poste. Poste Vita's capital is managed by Poste at the group level. Fitch views Poste Vita as an important contributor to Poste's earnings and believes support from Poste would be forthcoming if needed.

Poste Vita reported consolidated net income of EUR256m in 2013 (2012: EUR273m) and a consolidated solvency margin of 122% (2012: 117%).

Poste Vita is issuing subordinated debt to fund its expected growth and reduce dependence on Poste. Fitch expects Poste Vita's capital and financial leverage to remain commensurate with the ratings once the issue is completed.

RATING SENSITIVITIES

Any change in Poste's rating is likely to lead to a corresponding change in Poste Vita's rating. However, an upgrade linked to an upgrade of Poste would be conditional on Poste Vita maintaining its profitability - as measured by a net return on assets at or above 0.7% - and continued contribution to group profit. An upgrade for reasons other than an upgrade in Poste's rating is unlikely.

Poste Vita's rating could be downgraded if the company's performance and contribution to Poste group profits deteriorates to such an extent that Fitch no longer views it as being strategically important to the group.

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