Unipol — Capital/Financing Update 2021

Dec 13, 2021

Informazione Regolamentata n. 0265-89-2021		Data/Ora Ricezione 13 Dicembre 2021 08:36:18	Euronext Milan
Societa'	:	UNIPOL
Identificativo Informazione Regolamentata	:	155185
Nome utilizzatore	:	UNIPOLN08 - Nerdi
Tipologia	:	3.1
Data/Ora Ricezione	:	13 Dicembre 2021 08:36:18
Data/Ora Inizio Diffusione presunta	:	13 Dicembre 2021 08:36:19
Oggetto	:	Press release Unipol-UnipolSai - Fitch upgrades Unipol Group ratings: UnipolSai at A
Testo del comunicato

Vedi allegato.

FITCH UPGRADES UNIPOL GROUP RATINGS: UNIPOLSAI AT A-

Bologna, December 13th 2021

The rating agency Fitch Ratings has upgraded the Insurer Financial Strength Rating of UnipolSai Assicurazioni S.p.A. to "A-" from "BBB+" following the upgrade of Italy's rating (BBB / Stable Outlook) on December 3rd. Consequently, the Issuer Credit Rating of Unipol Gruppo S.p.A. was upgraded to "BBB+" from "BBB". The Group's debt ratings have also been upgraded by 1 notch:

• Unipol Group S.p.A. senior debts are now at "BBB";
• UnipolSai Assicurazioni S.p.A. subordinated debts are now at "BBB-";
• UnipolSai Assicurazioni S.p.A. perpetual RT1 debt is now at "BB".

The rating agency outlook of the ratings remains "stable".

The full text of the press release issued by Fitch Ratings is attached.

Unipol Gruppo S.p.A.

Unipol is one of the biggest insurance groups in Europe and the leading company in Italy in the non-life insurance sector, (especially in the MV and health businesses), with total premiums of approximately €12.2bn, of which €7.9bn in non-Life and €4.3bn in life (2020 figures). Unipol adopts an integrated offer strategy and covers the entire range of insurance and financial products, operating primarily through the subsidiary UnipolSai Assicurazioni S.p.A. The Group is also active in direct MV insurance (Linear Assicurazioni), transport and aviation insurance (Siat), health insurance (UniSalute), supplementary pensions and also covers the bancassurance channel (Arca Vita, Arca Assicurazioni and Incontra). It also manages significant diversified assets in the debt collection (UnipolReC), real estate, hotel (Gruppo UNA), medical-healthcare and agricultural (Tenute del Cerro) sectors. Unipol Gruppo S.p.A. is listed on the Italian Stock Exchange.

UnipolSai Assicurazioni S.p.A.

UnipolSai Assicurazioni S.p.A. is the insurance company of the Unipol Group, Italian leader in the Non-Life Business, in particular in the MV and Health businesses. Also active in Life Business, UnipolSai has a portfolio of over 10 million customers and holds a leading position in the national ranking of insurance groups with a direct income amounting to approximately €12.2bn, of which €7.9bn in Non-Life Business and €4.3bn in Life Business (2020 figures). The company has the largest agency network in Italy, with about 2,400 insurance agencies spread across the country. UnipolSai is also active in direct MV insurance (Linear Assicurazioni), transport and aviation insurance (Siat), health insurance (UniSalute), supplementary pensions and also covers the bancassurance channel (Arca Vita, Arca Assicurazioni and Incontra). It also manages significant diversified assets in the real estate, hotel (Gruppo UNA), medical-healthcare and agricultural (Tenute del Cerro) sectors. UnipolSai Assicurazioni is a subsidiary of Unipol Gruppo S.p.A. and is also listed on the Italian Stock Exchange.

13 DEC 2021

Fitch Upgrades UnipolSai's IFS to 'A-' on Sovereign Upgrade; Outlook Stable

Fitch Ratings - Frankfurt am Main - 13 Dec 2021: Fitch Ratings has upgraded Unipol Gruppo S.p.A.'s and UnipolSai Assicurazioni S.p.A.'s (the group's primary insurance subsidiary, together Unipol) Long-Term Issuer Default Ratings (IDRs) to 'BBB+' from 'BBB'. Fitch has also upgraded UnipolSai's Insurer Financial Strength (IFS) rating to 'A-' (Strong) from 'BBB+' (Good). The Outlooks are Stable. A full list of rating actions is at the end of this commentary.

Key Rating Drivers

The upgrades follow the upgrade of Italy's sovereign rating by Fitch to 'BBB' from 'BBB-' (see "Fitch Upgrades Italy to 'BBB'; Outlook Stable", published 3 December 2021, at www.fitchratings.com). Unipol's credit quality is highly linked to Italy's sovereign rating given the group's exposure to Italian sovereign debt. The Stable Outlook reflects that on Italy's sovereign rating.

The ratings reflect Unipol's reduced, although still high, asset concentration risk, following the reduction in the group's exposure to Italian sovereign debt in 2020. The ratings also reflect improvement to Unipol's capitalisation in 2020 - despite the adverse and volatile business and capitalmarket conditions caused by the coronavirus pandemic - as well as Unipol's strong profitability, moderate leverage and 'most favourable' business profile among rated peers.

The sovereign upgrade is captured in Fitch's assessment of Unipol's investment risk via its Sovereign Investment Concentration Risk factor. Unipol significantly reduced its holdings of Italian bonds to 2.8x consolidated shareholders' equity at end-2020, and this was further decreased to 2.6x at end-1Q21. Unipol's risky assets ratio (RAR), which measures the ratio of risky assets to capital, slightly improved to 146% at 1Q21 from 156% at end-2020. Following Italy's upgrade, it improved again to 105%. Fitch considers a portion of an insurer's exposure to 'BBB' category sovereign investments as risky assets. As a result of Italy's upgrade, this portion has decreased to 30% from 50%, as per Fitch's insurance criteria.

Fitch has increased Italy's score for "Industry Profile and Operating Environment" (IPOE) and, as a result, Unipol's assessment for "Company Profile", both defined under the agency's insurance criteria. This follows Italy's upgrade. The increase of Italy's IPOE score reflects Italy's reduced economic and country risks. The "Company Profile" scoring is tethered to the IPOE score to reflect our assessment of country risk.

RATING SENSITIVITIES

Factors that could, individually or collectively, lead to positive rating action/upgrade:

--A reduction in Unipol's exposure to Italian sovereign debt to below 2.0x consolidated shareholders' equity and a Prism FBM score in the high range of 'Very Strong' (end-2020: 'Very Strong'), both on a sustained basis.

--A one-notch upgrade of Italy's Long-Term Local-Currency IDR.

Factors that could, individually or collectively, lead to negative rating action/downgrade:

--A one-notch downgrade of Italy's Long-Term Local-Currency IDR.

--A sustained increase in Unipol's exposure to Italian sovereign debt to above 3.0x consolidated shareholders' equity.

--A decrease in Unipol's Prism FBM score to the lower range of 'Strong', or the FLR weakening to above 35%, on a sustained basis.

Best/Worst Case Rating Scenario

International scale credit ratings of Financial Institutions and Covered Bond issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sectorspecific best- and worst-case scenario credit ratings, visit https://www.fitchratings.com/site/re/ 10111579

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

ESG Considerations

Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg

Fitch Ratings Analysts

Alberto Messina

Director Primary Rating Analyst +49 69 768076 234

Fitch Ratings – a branch of Fitch Ratings Ireland Limited Neue Mainzer Strasse 46 - 50 Frankfurt am Main D-60311

Federico Faccio

Senior Director Secondary Rating Analyst +44 20 3530 1394

Graham Coutts, ACA

Senior Director Committee Chairperson +44 20 3530 1654

Media Contacts

Athos Larkou

London +44 20 3530 1549 athos.larkou@thefitchgroup.com

Peter Fitzpatrick

London +44 20 3530 1103 peter.fitzpatrick@thefitchgroup.com

Rating Actions

ENTITY/DEBT	RATING			RECOVERY	PRIOR
UnipolSai Assicurazioni S.p.A.	LT IDR	BBB+	Upgrade		BBB
	Ins Fin Str	A-	Upgrade		BBB+
• subordinated	LT	BBB-	Upgrade		BB+
• senior unsecuredLT		BBB+	Upgrade		BBB

ENTITY/DEBT	RATING			RECOVERY	PRIOR
• subordinated	LT	BB	Upgrade		BB
Unipol Gruppo S.p.A.	LT IDR	BBB+	Upgrade		BBB
• senior unsecuredLT		BBB	Upgrade		BBB
RATINGS KEY	OUTLOOK	WATCH
POSITIVE
NEGATIVE
EVOLVING
STABLE

Applicable Criteria

Insurance Rating Criteria (pub.26 Nov 2021) (including rating assumption sensitivity)

Applicable Models

Numbers in parentheses accompanying applicable model(s) contain hyperlinks to criteria providing description of model(s).

Prism Factor-Based Capital Model, v1.7.2 (1)

Additional Disclosures

Solicitation Status

Endorsement Status

Unipol Gruppo S.p.A. EU Issued, UK Endorsed

UnipolSai Assicurazioni S.p.A. EU Issued, UK Endorsed

Disclaimer

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTPS://WWW.FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, THE FOLLOWING HTTPS://WWW.FITCHRATINGS.COM/RATING-DEFINITIONS-DOCUMENT DETAILS FITCH'S RATING DEFINITIONS FOR EACH RATING SCALE AND RATING CATEGORIES, INCLUDING DEFINITIONS RELATING TO DEFAULT. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. DIRECTORS AND SHAREHOLDERS RELEVANT INTERESTS ARE AVAILABLE AT HTTPS://WWW.FITCHRATINGS.COM/ SITE/REGULATORY. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE OR ANCILLARY SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF PERMISSIBLE SERVICE(S) FOR WHICH THE LEAD ANALYST IS BASED IN AN ESMA- OR FCA-REGISTERED FITCH RATINGS COMPANY (OR BRANCH OF SUCH A COMPANY) OR ANCILLARY SERVICE(S) CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH RATINGS WEBSITE.

Copyright

Copyright © 2021 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch's factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a

variety of other factors. Users of Fitch's ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed.

The information in this report is provided "as is" without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US\$1,000 to US\$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US\$10,000 to US\$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers.

For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001 Fitch Ratings, Inc. is registered with the U.S. Securities and Exchange Commission as a Nationally

Recognized Statistical Rating Organization (the "NRSRO"). While certain of the NRSRO's credit rating subsidiaries are listed on Item 3 of Form NRSRO and as such are authorized to issue credit ratings on behalf of the NRSRO (see https://www.fitchratings.com/site/regulatory), other credit rating subsidiaries are not listed on Form NRSRO (the "non-NRSROs") and therefore credit ratings issued by those subsidiaries are not issued on behalf of the NRSRO. However, non-NRSRO personnel may participate in determining credit ratings issued by or on behalf of the NRSRO.

Endorsement policy

Fitch's international credit ratings produced outside the EU or the UK, as the case may be, are endorsed for use by regulated entities within the EU or the UK, respectively, for regulatory purposes, pursuant to the terms of the EU CRA Regulation or the UK Credit Rating Agencies (Amendment etc.) (EU Exit) Regulations 2019, as the case may be. Fitch's approach to endorsement in the EU and the UK can be found on Fitch's Regulatory Affairs page on Fitch's website. The endorsement status of international credit ratings is provided within the entity summary page for each rated entity and in the transaction detail pages for structured finance transactions on the Fitch website. These disclosures are updated on a daily basis.