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Apr 2017 Fitch Rating estimates that the outlook of the Italian life insurance has deteriorated from stable to negative. The rating agency expects that the increasing gap between the retur of Italian and German Treasury bonds are weakening the capitalization of insurers and their business portfolios.
This discrepancy expands the attractiveness of Italian bonds, which may encourage holders of long-term life insurance contracts to terminate them and invest in Treasury bills. This would result in a capital flight outside the life insurance industry, a reduction in assets under management and a decline in profitability.
The Italian debt accounts for half of Italian insurers' investments.
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