Fitch turns negative on Italian insurers
“There is an intrinsic linkage between Italian insurer
ratings and the sovereign rating,” Fitch said.Italian insurers hold tens of billions of euros of Italian
sovereign bonds, seen at greater risk of default after Italy’s
stretched public finances prompted Fitch and rivals Moody’s and
S&P to lower its credit rating this month.Italy ranks as one of the world’s biggest sovereign debtors,
and a default would also inflict losses on European insurers
outside Italy, whose holdings of Italian debt dwarf their
investments in distressed Greek government bonds.Twenty-one leading European insurers had 151 billion euros
($206 billion) of Italian debt in June, against 8.5 billion
euros of Greek debt, according to Barclays Capital.Shares in Europe’s leading insurers have lost nearly a third
of their value in the past eight months amid fears they could be
forced to raise cash to offset impairments on their government
bond holdings as the eurozone debt crisis deepens.However, analysts say European insurers are unlikely to
follow the region’s banks in requiring fresh capital at this
stage, having built up and de-risked their reserves over the
last three years.Shares in Generali , Italy’s biggest insurer, were
2.2 percent higher at 12.7 euros by 1520 GMT, underperforming a
3 percent rise in the Stoxx 600 European insurance index
.($1 = 0.733 Euros)
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