ITALY - The Italian insurer Assicurazioni Generali SpA will capitalise from the pension reform in the medium term, says rating agency Standards & Poor’s.

“In the medium term, Generali is expected to take full advantage of pension reforms, given its presence and penetration in the main European markets,” Standard & Poor's Ratings Services said.

The rating agency said so as it awarded a 'AA' long-term counter-party credit and insurer financial strength ratings to Alleanza Assicurazioni SpA, Generali’s main Italian life insurance arm.

According to the rating agency, Alleanza generated 24% of total life premiums in 2003.

"The ratings on Alleanza reflect its status as a core subsidiary of Italy-based composite insurer Assicurazioni Generali SpA," said S&P credit analyst Laura Santori.

"Alleanza is a core subsidiary of Generali due to its size, contribution to Generali's earnings, competitive position, and capitalization," Santori commented.

The analyst also said that Alleanza’s stable outlook “directly reflects” the stable outlook on its parent company.

Generali's earnings were expected to continue to improve, particularly in property casualty insurance and its capitalization is expected to be maintained at the 'AA' level, S&P’s report also indicates.

“Life earnings should be fuelled by strong new production, with the volume effect offsetting the slight decrease in margins in Italy that resulted from the higher proportion of less profitable single-premium contracts.”

Its solid capital base should be able to withstand the strain from new business, thanks to a solid stream of retained earnings and the momentum of the new marketing campaign should continue in Italy.

Neither Alleanza nor Generali were available for comment.