Fitch affirms Generali rating

The outlooks are stable. Fitch has also affirmed Generali's hybrid subordinated notes at 'A-' and senior notes at 'A+'. A full list of rating actions is shown below.

Fitch said the affirmations reflect Generali's strong operating performance in 2010 as well as Fitch's expectations that the company will continue to deliver strong underwriting margins in its main markets Italy, France and Germany, and extract value from its presence in Central and Eastern Europe region.

It added: "The ratings are underpinned by the group's multi-channel/multi-brand approach and geographical diversification, its underwriting discipline, prudent reserve practices and capitalisation which, however, Fitch views as just adequate for IFS ratings in the 'AA' range.

"Offsetting these positives are the company's significant investment leverage; relatively high gross debt leverage and weak interest coverage; and a challenging operating and investment environment in Italy, as reflected by prospects for sluggish economic growth and capital markets volatility."

While Fitch acknowledges that capital adequacy has improved from 2008 levels, the agency said it remains just adequate for the current ratings level. The significant amount of goodwill and intangibles negatively affects the quality of capital. However, Fitch notes positively that Generali's capitalisation was more resilient than its peers through the financial crisis and financial flexibility remains strong.