Societa Cattolica di Assicurazione's solvency II (SII) ratio dropped to 122% on May 22, 2020, from 147% in first-quarter 2020 due to lower risk-free rates and wider spreads on Italian government bonds, which represent 55% of the group's investments. As the SII ratio is getting closer to the regulatory minimum, we see a higher risk that the group could defer coupon payments on its rated hybrid instruments and, consequently, are downgrading these instruments to 'BB' from 'BB+'. At the same time, we are affirming the 'BBB' ratings on the group, because our view of its financial strength and operating performance remains unchanged despite the COVID-19 pandemic and short-term SII volatility. The negative outlook reflects that on Italy. On June 10,
