“The deterioration in the solvency conditions of Bcc Vita, Vera Vita and the Group requires timely capitalization measures. To this end,” Ivass “expects this company to strengthen the individual and Group Solvency ratio, achieving, by 30 September 2020 , the share capital increase for which the administrative body has resolved to request the delegation, for the entire amount of € 500 million. At the same time, the additional initiatives necessary to restore the solvency index in line with the risk appetite thresholds defined by the Group “which” provide for a Solvency ratio between 160% and 180% “.For IVASS “considering the exposure of the assets to a context of high market volatility as well as the prospective uncertainties that connote significant risk, technical and financial factors, only an intervention on the capital is able to ensure, in the short term, the restoration of the solvency conditions of the group and of the individual companies adapted to the conditions of the new market context “.
The “significant weakening of the solvency conditions” is made manifest by the deterioration of the consolidated Solvency ratio, which fell from 175% at the end of 2019 to 111% on 8 May, “the lowest value of the entire national insurance market” and which further deteriorated at 22 May 2020, falling to 103%, now “close to the regulatory minimum” of 100%. Even more serious is the situation of the subsidiaries Bcc Vita (jv with Iccrea) and Vera Vita (jv with Banco Bpm), whose solvency ratios dropped to 25% and 65% respectively on 15 May.
With the recent improvement in the spread on government bonds, a value that greatly affects Solvency, the ratio may have improved but it is clear that the situation remains fragile and the company itself is aware of it, given that it had already decided to request the delegation on the rise.
Moreover, this “negative trend in prudential supervision requirements”, explains IVASS, is also attributable to the “structure” and “exposures” of investments. In particular of the 28 billion of “class C investments” (in relation to which the company bears the risk), 4.8 billion were represented at 31 December 2019 by investments in corporate bonds, of which 22% with BBB- rating , 24.2% non investment grade and 3.2% unrated.
“These investments, taking into account the current market situation, are particularly exposed, also prospectively, to losses in value due to any further increases in spreads and downgrades”. “A further element of vulnerability”, highlights Ivass, can be represented by the “concentration in the financial sector (68%)” of bonds, to which is added the fact that “29% of investments in corporate securities (855 million euro) “consists of subordinated bonds of which” 60% “belongs to the non-investment grade class” and to the immediately higher rating class (BBB-) “.
In recent days Alberto Minali, up to last October as group CEO, also resigned from the office of director and initiated a lawsuit against the Veronese company in relation to the revocation of the proxies, deemed illegitimate, which took place precisely in October. This is what is learned in financial circles. Cattolica’s board of directors had also included the revocation of Minali from the board of directors for “just cause” on the agenda of the shareholders’ meeting on 27 June.