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Fitch affirms SACE rating at 'A-' with outlook negative

Fitch said it has affirmed export credit agency SACE rating at 'A-' with outlook negative. “The ratings reflect SACE's strong capitalisation and business profile as Italy's export credit agency as well as its financial exposure to Italy,” Fitch said in a report.

Fitch views SACE's capitalisation “as very strong and the insurer's risk management framework as robust. This view is based on SACE's relatively low multiple of nominal credit exposure to equity and appropriate reserving. SACE uses Solvency II risk metrics to assess its solvency capital position, although it is not regulated as an insurance company, and therefore is not subject to Solvency II. At end-2015, SACE's risk-based solvency margin was 1.4x risk capital based on a prudent confidence level of 99.85%, which SACE regards as compatible with a 'AA' rating. We expect SACE's capitalisation to have remained strong in 2016,” Fitch added.

Fitch noted also that SACE's ratings are “ influenced by the credit quality of Italy (BBB+/Negative), Cassa Depositi e Prestiti (BBB+/Negative) and the Italian banking sector. This influence is reflected in our view of SACE's asset concentration risk and sovereign constraint on its ratings at 'A-'. We have set the sovereign constraint at one notch higher than the sovereign rating of Italy, in recognition of SACE’s strong credit profile and diversification by geography.”

According to the rating agency “if Italy's sovereign rating were downgraded, it is probable that SACE's ratings would be downgraded. If Italy's rating were downgraded to BBB- or lower, it is likely that Fitch would reconsider its approach of rating SACE one notch above the sovereign and would equalize its rating with the sovereign.”


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