The worsening of the Italian economic prospects which prompted Fitch to confirm the rating on our country, however lowering it the outlook from "stable" to "negative", it also infects banks and insurance companies.
In just three days, the American agency has in fact revised its opinion on the future of the most important listed groups in our country.
To understand why, just re-read the reasons behind the downward revision of the national outlook. According to Fitch iItaly's public debt will remain "very high", leaving the country "more exposed to potential shocks". Among the critical issues that have emerged, US analysts point out "the new and untested nature of the government, the considerable political differences between the coalition partners and the contradictions between the high costs of implementing the commitments made in the 'Contract' and the objective of reduce public debt. It is unclear how these political tensions will be resolved."
Why take time then and not intervene immediately on the rating? The reason is obvious: for 2018 the policies of the Lega Executive - M5s reasons Fitch, will not yet affect the level of the deficit, which should fall to 1,8% of GDP against 2,3% in 2017.
FITCH: THE BANKING OUTLOOK
The judgment arrived on 5 September on the banks, follows closely and represents a direct consequence of the Italian one. Wednesday Fitch brought the outlook of five Italian banks changed from "stable" to "negative": Unicredit, Intesa Sanpaolo, Mediobanca, Credem and Bnl. The long-term rating "BBB", as established on 31 August, remains instead confirmed.
At the basis of the change in prospects is the new economic climate brought about by the new government. Although, as mentioned, the policies of the Executive led by Premier Giuseppe Conte will not have direct repercussions on the deficit for the moment in the current year, the deficit/GDP ratio will still not be able to meet the forecasts, remaining higher than 0,2 %, also due to lower GDP growth. For next year, however, a deficit of 2,2% of GDP is expected, beyond the 2% target set by the EU.
“The activities of Intesa Sanpaolo, Mediobanca and Credem are mainly domestic and their IDR and VR (the ratings, ed) are therefore impacted by Italy's risk profile and by the domestic economy,” explained Fitch. As far as Unicredit is concerned, however, its geographical diversification is not enough to completely detach the parent company from the fate of Italy and its economy, considering essentially domestic npls.
FITCH: NEGATIVE OUTLOOK ALSO FOR AZIMUTH
After the banks, it was September 6th at Azimut face the downward revision of its outlook from "stable" to "negative" and confirmation of the "BBB" rating.
“The negative outlook – reads Fitch's note – primarily reflects more complex market conditions which could have an impact on assets under management, clients' risk appetite and net inflows, elements that could put pressure on Azimut's profitability and gross debt to ebitda ratio”.
Although Azimut is trying to expose itself more to foreign markets, while simultaneously reducing its exposure to the Italian market, "we believe that the dynamics affecting the risk profile of Italian government bonds will in any case have repercussions on the company". Not only that, according to the US agency, "unlike other, more traditional operators, Azimut relies more on performance commissions, which are variable, and therefore could be more influenced if the markets continue to have a negative trend".
FITCH AND INSURANCE PERSPECTIVES
Even the main Italian insurance groups have no escape. In the sector Fitch has lowered the outlook of nine big companies to "negative" from "stable".
The long-term ratings and assessments on the insurance financial strength (IFS) of all remain confirmed. As regards the lowering of the outlook, the list includes Generali, Reale Mutua, Sace, Intesa Sanpaolo Vita, Itas Mutua, Poste Vita, UnipolSai (together with the parent company Unipol Gruppo), Siat and Vittoria.
The reasoning behind the decision is the same for everyone: the presence in the portfolio of a considerable amount of Italian government bonds. Taking Generali as an example, after confirming the "A-" rating, Fitch reported that at the end of 2017 the insurance company had Italian government bonds in its portfolio for an amount of 64 billion euros (2,5 times the shareholders' equity). At the end of 2017 Unipol instead had 32 billion of government bonds in its portfolio (more than 4 times the shareholders' equity), Vittoria Assicurazioni 0,8 billion euro (once the shareholders' equity).
