Ratings agency has warned of possible one notch downgrade
Italian insurer Generali has had its ‘A’ insurer financial strength rating placed on CreditWatch with negative implications by Standard and Poor’s following a recent management reshuffle.
The ratings agency also placed the ‘A’ long term ratings of “strategically important” subsidiaries Generali PanEurope and Deutsche Bausparkasse Badenia AG (Badenia) on CreditWatch with negative implications
“The CreditWatch placement reflects our view that the removal of the CEO on June 2, 2012 has created uncertainty regarding Generali’s future strategic direction.”
“While the planned replacement CEO, Mario Greco, is reported to have a good management track record, the change in leadership could weigh on Generali’s ability to respond quickly to strategic challenges from the demanding and evolving economic environment,” said a statement from Standard and Poor’s.
“These challenges include Generali’s ability to rebuild its capitalization and improve its financial flexibility, both of which we view as weaknesses relative to the current rating. Furthermore, the unexpected change in CEO could, in our view, indicate potential governance issues,” the statement added.
The CreditWatch placement reflects S&P’s view that there is a 50% chance of the company being downgraded, likely by one notch.