LONDON (Standard & Poor's) Dec. 9, 2011--Standard & Poor's Ratings Services today placed its ratings on the following insurers (and certain related operating subsidiaries and certain holding companies) on CreditWatch with negative implications: ALLIANZ Group (including the Euler Hermes group), AVIVA Group, AXA Group, CAISSE CENTRALE de REASSURANCE (CCR), CNP Group, GENERALI Group, Irish Public Bodies Mutual Insurances Ltd. (IPB), MAPFRE Group, MILLENNIUM bcp - Ageas Group, NACIONAL de Reaseguros S.A. (Nacional), Pozavarovalnica SAVA d.d. (SAVA), RSA Insurance Ireland Ltd (RSA Ireland), Societa Cattolica di Assicurazione (CATTOLICA), TRIGLAV Group, UNIPOL Group.

The CreditWatch placements come in the wake of our Dec. 5, 2011 actions where we placed our ratings on 15 of the 17 eurozone member countries on CreditWatch with negative implications. The downside risk associated with the potential sovereign rating actions is one notch in the case of Austria, Belgium, Finland, Germany, Luxembourg, and the Netherlands and two notches in all other cases.

The bias of our insurance ratings in the eurozone and Europe as a whole remains negative. Of our ratings, approximately 30% carry negative outlooks or are on CreditWatch with negative implications, 64% carry stable outlooks, and 6% carry positive outlooks or are on CreditWatch with positive implications. Before today's sovereign-related rating actions, these percentages were 17%, 77%, and 6%, respectively.

Our recent commentary "European Insurance Credit Trends: Third-Quarter 2011 Market Movements Take Their Toll On Insurers' Capital Adequacy," published on Nov. 4, 2011, explained the factors underpinning our views. Our more-recent negative adjustments to Europe's economic growth prospects (see "European Economic Outlook: Back In Recession," Dec. 1, 2011) and the potentially heightened credit risk reflected in our Dec. 5, 2011 sovereign actions only serve to compound the difficulties that insurers face and would likely result in predominantly negative rating actions over the medium term.

Our rating actions can be categorized according to the criteria used in taking the action.

GOVERNMENT-RELATED ENTITIES (GRES) IN FRANCE AND SLOVENIA

Ratings on France-based CCR and Slovenia-based Triglav Group and SAVA may be lowered under our GRE criteria (see "Rating Government-Related Entities: Methodology And Assumptions," Dec. 9, 2010). The downside risk associated with these ratings is two notches in the case of CCR and one notch in the case of Triglav Group and SAVA. In our opinion, the likelihood of timely and sufficient extraordinary government support in the event of financial distress is "almost certain" in the case of CCR, "high" in the case of Triglav Group, and "moderately high" in the case of SAVA.

DOMESTIC INSURERS IN IRELAND, PORTUGAL, SPAIN, AND ITALY

Ratings on Ireland-based Allianz PLC, RSA Insurance Ireland Ltd., AXA Insurance Ltd., Aviva Insurance (Europe) SE, and IPB, Portugal-based Millenniumbcp-Ageas Group, and Spain-based Mapfre Group are at the same level as the local sovereign and in many cases are already constrained under our insurer country risk criteria (see "Criteria Update: Factoring Country Risk Into Insurer Financial Strength Ratings", Feb. 11, 2003). Our criteria use the local currency sovereign rating as a proxy for country risk.

The downside risk associated with all of these ratings is two notches. The local currency sovereign rating already limits the ratings on these companies, either because their assets include material amounts of domestic sovereign debt, domestic bank debt, or domestic bank deposits, or because they have a largely domestic customer base.

The 'BBB-' rating on Irish Life Assurance PLC is already on CreditWatch with developing implications, so is not directly affected by the Dec. 5 sovereign actions. However, the downside risk associated with the Irish sovereign rating could result in the CreditWatch implications being revised to negative.

Ratings on Spain-based Nacional and Italy-based Unipol Group and Cattolica may also be lowered under our insurer country risk criteria. The downside risk associated with all of these ratings is one notch.

The ratings on Italy-based Allianz SpA are not constrained at the Italian local currency sovereign rating level under our criteria "Nonsovereign Ratings That Exceed EMU Sovereign Ratings: Methodology And Assumptions," published on June 14, 2011. However, under these criteria, we cap our ratings on "core" insurance subsidiaries with 10% exposure or higher to the jurisdiction of domicile at three notches above our rating on the related sovereign. We could lower the ratings on Allianz SpA by two notches.

The ratings on Euler Hermes SIAC SpA are also not constrained at the Italian local currency sovereign rating level by these criteria. However, we cap our ratings on insurers with less than 70% of assets and liabilities in the jurisdiction of domicile at two notches above our rating on the sovereign when the sovereign has an investment-grade rating. We could lower the ratings on Euler Hermes SIAC SpA by two notches.

INSURERS THAT OPERATE ACROSS THE EUROZONE OR HAVE A HIGH LEVEL OF EXPOSURE TO EUROZONE RISKS

The rating on Generali is not constrained at the Italian local currency sovereign rating level under our June 14, 2011 criteria. Based on these criteria, the rating on Generali may be up to three notches above the Italian local currency sovereign rating because of its diverse businesses in higher-rated eurozone sovereign countries. The potential lowering of the Italian sovereign rating by up to two notches would imply a lowering of Generali's rating, although under these criteria this could be limited to one notch. However, we believe that the group could be downgraded by a further notch due to the aggregate effects of exposure to eurozone sovereign debt, related bank debt and deposits, the resulting potential impact on capital adequacy that is already stretched, and the impact of the expected slowdown in economic activity in the eurozone. In aggregate, we could lower the ratings on Generali by up to two notches.

For certain other European insurance groups (Allianz, Axa, Aviva, and CNP), the CreditWatch action relates to the aggregate effects of exposure to eurozone sovereign debt, related bank debt and deposits, the resulting potential impact on capital adequacy, and the impact of the expected slowdown in economic activity in the eurozone. We could lower the ratings on these insurers by one notch.

In our capital adequacy models (see "Refined Methodology And Assumptions For Analyzing Insurer Capital Adequacy Using The Risk-Based Insurance Capital Model," June 7, 2010), we have estimated the potential adverse impact on capital adequacy from the downside risk related to the eurozone sovereign rating actions. We have not included any incremental concentration risk charges on any of the 'AAA' rated sovereign debt affected by the sovereign rating action. This charge is primarily used as a "flag" in our capital analysis, i.e., an indicator of the presence of concentration risk.

These rating actions will, in their turn, affect certain holding companies, "core," and "strategically important" operating subsidiaries as well as certain short-term ratings and issue ratings on the above-mentioned insurers.

We expect to resolve these CreditWatch actions within four weeks of the resolution of the CreditWatch placements on the relevant sovereigns. Upon resolution, individual ratings may be lowered by one or two notches (see references to downside risks above) or may be affirmed.