Morningstar DBRS Confirms the Financial Strength Rating and the Issuer Rating of Unipol Assicurazioni S.p.A. at A (high) With Stable Trends

DBRS Ratings GmbH (Morningstar DBRS) confirmed the Financial Strength Rating (FSR) and the Issuer Rating of Unipol Assicurazioni S.p.A. (Unipol or the Company) at A (high) with Stable trends.

KEY CREDIT RATING CONSIDERATIONS
The credit ratings and Stable trends reflect the Company's strong market position in Italy, supported by sound product diversification and an extensive distribution network. Unipol's strong franchise and excellent operational execution have contributed to consistent premium generation in both the nonlife and life segments in recent years. Underwriting profitability improved in 2024, primarily driven by lower catastrophic losses contributing to overall robust bottom-line profitability metrics. The Company's capitalisation is supported by its robust Solvency II ratio and adequate levels of financial leverage which is expected to decrease over time.

The credit ratings also consider that the Company's activities remain focused in Italy, and its risk profile is affected by the still large, albeit decreasing, exposure to Italian government bonds.

Unipol's FSR is three notches higher than Morningstar DBRS' sovereign credit rating of BBB (high) with a Positive trend on the Republic of Italy (Italy) and falls within the four-notch credit rating differential allowed by Morningstar DBRS' "Global Methodology for Rating Insurance Companies and Insurance Organizations". This differential reflects Morningstar DBRS' view that, given healthy profitability, Unipol is likely to pay insurance claims even if the sovereign is under stress. In the event of a weakening sovereign, premium revenues will likely continue to be generated, providing steady cash flow and enabling the Company to meet its claims obligations.

CREDIT RATING DRIVERS
The credit ratings would be upgraded if Unipol materially improves its profitability and risk profile, together with an upgrade of the sovereign credit rating of the Republic of Italy.

Conversely, the credit ratings would be downgraded if there were a downgrade of the sovereign credit rating of the Republic of Italy due to the Company's substantial asset exposure and business concentration in the country. The credit ratings would also be downgraded if the Company's underwriting profitability or capitalisation were to materially deteriorate.

CREDIT RATING RATIONALE
Franchise Strength Building Block Assessment: Strong
Unipol is a leading insurance company in Italy, with a strong market position in both nonlife and life segments. The Company operates almost exclusively in the domestic market offering a wide range of products, including mobility, home, personal, and professional protection, as well as life, savings, and investment products. Unipol operates through a multichannel distribution network, which counts on an extensive system of agents across the national territory. The company also has a well-developed bancassurance business in partnership with Italian banks, the two main ones being BPER Banca S.p.A. (BPER) and Banca Popolare di Sondrio S.C.p.A. (BP Sondrio) in which it is a minority shareholder. After successfully executing its 2022-24 plan targets, in March 2025, Unipol announced an ambitious 2025-27 strategic plan which involves significant growth in both organic premiums, as well as cumulative net consolidated profit. In 2025, Unipol also successfully completed the merger between UnipolSai Assicurazioni S.p.a. and the former holding company Unipol Gruppo S.p.a..

Earnings Ability Building Block Assessment: Strong/Good
Unipol's earnings ability remains sound, supported by improved revenue generation in 2024. The Company's underwriting profitability also improved significantly in 2024 mostly thanks to the lower negative impact of large losses associated with adverse atmospheric events compared with the year before. The combined ratio in 2024 was a robust 93.6%, which compares to 98.5% in 2023. Catastrophic losses had a negative impact of 7.6% on the combined ratio in 2024 compared with 14.3% in 2023. Unipol reported a consolidated profit of EUR 1,119 million (-2% YOY), resulting in a return on equity of 11.5% (15.2% in 2023).

Risk Profile Building Block Assessment: Good
The Company is exposed to catastrophe risk within its nonlife insurance portfolio and this exposure could further increase with the implementation of the mandatory insurance protection against natural catastrophic events approved by the Italian government for all business incorporated in Italy. Nevertheless, Morningstar DBRS believes this risk is mitigated by the Company's sophisticated risk management framework and strict underwriting standards and procedures, which will allow Unipol to maintain a consistent catastrophic risk appetite. Unipol's exposure to Italian sovereign debt remained relatively stable, representing 30% of the total investment portfolio at YE24. The share of securities rated BBB within the Company's fixed income portfolio further decreased to 56% at YE24 from 58% at YE23.

Liquidity Building Block Assessment: Strong/Good
Unipol has a predictable claims profile and adequate holdings of highly liquid assets. While the Company's investment portfolio comprises mainly fixed income securities that provide a source of readily marketable assets, Unipol's substantial holding of BBB-rated domestic bonds exposes the Company to any potential stressed market conditions.

Capitalisation Building Block Assessment: Good
Overall, the Company has strong capital cushions, solid earnings generation capacity, and adequate leverage. Unipol's Solvency II ratio on a consolidated basis remained robust at 212% at YE24, which compares favourably against domestic and international peers. The Solvency ratio is affected by the rules pertaining to the prudential consolidation of the two banking subsidiaries, BPER and BP Sondrio. If the banking participations were to be considered as non-strategic investments, the overall Solvency II ratio would increase to 260% YE24. Notably, the leverage ratio will decrease significantly after the merger as the Company will let the senior bonds mature without replacement.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
ESG Considerations had a significant effect on the credit analysis.

Environmental (E) Factors
The Environmental factor is considered relevant but does not affect the credit ratings or trends assigned to the Issuer. As part of its operations within the property and casualty insurance business, Unipol is exposed to climate and weather risks as well as natural catastrophic events in Italy, including earthquakes, wildfires, flooding, etc. Morningstar DBRS considers that the Issuer has adequate procedures in place to assess and measure the impact of these risks on its operations and supports broader global actions that aim to minimise them.

Credit rating actions on Italy are likely to have an impact on this credit rating. ESG factors that have a significant or relevant effect on the credit analysis of Italy are discussed separately at https://dbrs.morningstar.com/issuers/17689.
 
Social and Governance factors affect Unipol as the ESG factors for Italy are passed through, given that the Company's credit ratings or trend would move along with the credit ratings or trend of the sovereign (see Credit Rating Drivers).

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (16 May 2025), https://dbrs.morningstar.com/research/454196.

Notes:
All figures are in euros unless otherwise noted.

The principal methodology is the Global Methodology for Rating Insurance Companies and Insurance Organizations (10 September 2024; https://dbrs.morningstar.com/research/439195). In addition, Morningstar DBRS uses the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (16 May 2025; https://dbrs.morningstar.com/research/454196) in its consideration of ESG factors.

The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

The sources of information used for this credit rating include Morningstar, Inc. and company documents, Unipol's consolidated annual reports 2018-24, Unipol's Solvency and Financial Condition Report 2018-24, Unipol's Q1 2025 consolidated results, Unipol's H1 2024 consolidated interim financial report, Unipol's 2024 Solvency and Financial Condition Report, and Unipol's investor presentations. Morningstar DBRS considers the information available to it for the purposes of providing this credit rating to be of satisfactory quality.

Morningstar DBRS does not audit the information it receives in connection with the credit rating process, and it does not and cannot independently verify that information in every instance.

The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. Morningstar DBRS' trends and credit ratings are under regular surveillance.

For further information on Morningstar DBRS historical default rates published by the European Securities and Markets Authority (ESMA) in a central repository, see: https://registers.esma.europa.eu/cerep-publication. For further information on Morningstar DBRS historical default rates published by the Financial Conduct Authority (FCA) in a central repository, see https://data.fca.org.uk/#/ceres/craStats.

The sensitivity analysis of the relevant key credit rating assumptions can be found at: https://dbrs.morningstar.com/research/458579.

This credit rating is endorsed by DBRS Ratings Limited for use in the United Kingdom.

Lead Analyst: Mario De Cicco, Vice President, Global Insurance & Pension Ratings
Rating Committee Chair: Michael Driscoll, Credit Rating Officer, Global Financial Institution Ratings
Initial Rating Date: 8 October 2020
Last Rating Date: 15 January 2025

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