AM Best has upgraded Generali's Financial Strength Rating (FSR) to A+ (Superior) from A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) to “aa-” (Superior) from “a+” (Excellent). The outlook is stable.

The ratings reflect Generali’s very strong balance sheet, as well as its strong operating performance, very favorable business profile and appropriate enterprise risk management.

The AM Best’s press release reads:

The rating upgrades reflect an improvement in Generali’s balance sheet strength fundamentals. Generali’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), was at the strongest level at year-end 2023. Furthermore, the group reported a Solvency II SCR ratio of 209% as of 30 September 2024 (year end 2023: 220%). The reduction in exposure to Italian sovereign bonds undertaken by Generali in recent years has rendered the group’s regulatory solvency and risk-adjusted capitalization levels less sensitive to movements in spreads of Italian sovereign bonds. The weight of Italian government bonds on the group’s balance sheet has decreased from EUR 63 billion in 2019 to EUR 39 billion in 2023.

However, AM Best notes that Generali’s exposure to Italian sovereign bonds remains significant and will continue to be an offsetting factor in the company’s balance sheet strength assessment.

Generali’s strong operating performance is driven by solid technical performance. The group’s technical results are underpinned by its non-life business, which produced a discounted combined ratio of 94.0% in 2023, as reported by the company. Life technical margins (present value of new business premiums) remained strong, increasing to 5.78% at year-end 2023 (2022: 5.69%). The group experienced net outflows in life business in 2023 amounting to EUR 1.3 billion as a result of the uptick in interest rates. Outflows on traditional savings products were largely offset by inflows on separate account business (Unit-Linked) and life protection. Management has taken action to correct the situation, and the group has reported net inflows in life business of EUR 6.8 billion at the end of the third quarter of 2024.

Generali’s very favorable business profile is underpinned by its leading and defensible positions in its core markets. The group has a solid franchise, reinforced by its excellent access to markets through its proprietary network and multichannel distribution strategy. The group has continued to develop its position in core markets through acquisitions, most notably with the acquisition of Liberty Seguros in 2023.