Societa Cattolica di Assicurazione

We estimate Cattolica's year-end net profits before minorities but excluding goodwill impairments will exceed €100 million. The €61 million in goodwill impairments announced in the second quarter of 2020 are neutral to our assessment of Cattolica's capital and earnings as goodwill is deducted from our calculation of total adjusted capital (TAC). From 2021 onward, we expect the group will generate €130 million-€140 million net income per year, and will restart distributing dividends with a payout ratio of about 60%. The stable outlook mirrors that on Italy. We could lower the ratings on the insurer over the next 12-24 months if we lower our long-term rating on Italy. We could upgrade the rating on Cattolica over the next 12-24 months following

...The partnership with Generali Italia SpA strengthens Cattolica's financial profile, while paving the way to potential synergies. In October 2020, Generali subscribed a reserved share capital increase for 300 million in exchange for 24.46% of capital in Cattolica. This fresh capital injection materially improves our view of the company's financial risk profile. Generali's capital increase was part of a wider strategic agreement signed between the two insurers earlier this summer, which also grants Cattolica access to Generali's products and capabilities in the areas of asset management, internet of things, health business and reinsurance, generating potential revenues and cost synergies in the medium term. COVID-19 will hamper premiums growth in 2020, but will not weaken Cattolica's operating performance. We expect Cattolica's performance to remain resilient in 2020 despite COVID-19. While the lockdown between March and May had a strong negative impact on premiums (net premiums declined...

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