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Moody’s Investors Service has affirmed the A2 insurance financial strength rating (IFSR) of Allianz S.p.A., the Italian subsidiary of Allianz SE, and simultaneously revised the outlook from negative to stable.
The rating affirmation and outlook revision are attributed to the improved credit quality of the Government of Italy (Baa3 stable), evidenced by Moody’s recent change in Italy’s outlook to stable from negative.
Allianz’s rating is intricately linked to the sovereign rating of Italy, given the company’s significant operating and asset exposure to the country.
Despite this linkage, Moody’s highlights that Allianz’s stand-alone credit profile is considered stronger than that of Italy, primarily due to a reduced exposure to Italian sovereign debt.
The credit profile also benefits from strong support from its parent company, Allianz SE (Aa2 stable), which plays a crucial role in maintaining the A2 IFSR.
Notably, the group support from Allianz SE positions the company’s rating four notches above Italy’s sovereign rating and three notches above its stand-alone credit profile.
Italy remains a vital market for the Allianz Group, with the country being the second-largest insurance national market by gross written premiums and a consistent major contributor to Allianz SE’s operating profit.
Moody’s outlines factors that could lead to a potential upgrade or downgrade of Allianz’s IFSR. An upgrade may be triggered by an improvement in Italy’s credit quality, demonstrated by an upgrade of the sovereign rating.
Conversely, potential downward rating pressure could result from a deterioration in Italy’s credit quality, a shift in the strategic importance of the Italian business within the Allianz Group, or a substantial decline in the issuer’s earnings profile, operating performance, or capitalisation levels.
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