AXA COULD BUY ASSETS FONDIARIA-SAI HAS TO SELL

French insurer Axa could purchase some assets of Fondiaria-SAI if the latter's merger with Unipol goes ahead, reports Reuters, citing three unnamed sources. If the Unipol-Fondiaria deal goes ahead, the combined insurer would have about 32% of Italy's non-life sector and 37% of its motor insurance market. Italy's antitrust authority is thought likely in some corners to want the enlarged company to sell off some of its assets, in motor in particular and in non-life in general. The report is not devastatingly new news. The French insurer's interest in parts of Fondiaria-SAI was well-flagged in December 2011, when it was reported to have made informal approaches about buying some parts of the group. Any new opportunity that arose for Axa to pick up parts of the Italian insurer is unlikely to be ignored. Meanwhile, Fitch has downgraded Fondiaria-SAI's and its subsidiary Milano Assicurazioni's Insurer Financial Strength (IFS) ratings to 'B+' from 'BB-'. The status has been changed to Evolving from Negative. The downgrade follows Fondiaria-SAI's announcement that it expected to lose €1.1bn ($1.43bn) in 2011, up from an estimated €925m in December, with a solvency margin estimated at just 75%, down from an estimated 90% in December 2011. Fitch said that in its view "capital remains volatile and highly exposed", and that the quality of that capital was "negatively affected by the large proportion of unrealized gains on real estate and goodwill". Fitch also noted "double leverage" of that capital between Fondiaria-SAI and Milano. On current assessments, Fitch said that if Fondiaria-SAI were to be successful in raising €1.1bn in new capital, it would likely raise its rating by a single notch. If it fails to raise the cash, a further downgrade would be considered. Fitch also foresaw "substantial execution risk" in the proposed four-way integration of Unipol, Fondiaria-SAI, Premafin and Milano Assicurazioni.