Standard & Poor\'s Corp. on Tuesday downgraded the financial strength rating of Assicurazioni Generali S.p.A. to AA- from AA and revised its outlook on the Italian insurer to stable from negative.

The downgrade came as S&P completed its review of seven European global multiline insurers as credit markets continued to decline.

Analysts with the ratings service said they expect the downswing to "remain a key rating sensitivity for global multiline insurers in 2009 and 2010."

S&P analysts said the insurers entered the period from a position of "relative strength" and that the insurers remain in "very strong competitive positions" with "generally sound business fundamentals."

However, S&P noted that while some highly rated insurers are operating with lower capitalization than usual for their respective rating categories, analysts believe an insurer\'s earnings capacity still is sufficient to "bring capital adequacy close" to a level consistent with the rating over the next two years. The uncertainty of this, however, triggers a negative outlook, S&P said.

Though Trieste, Italy-based Generali was downgraded, other insurers had their ratings affirmed.

Zurich Financial Services\' AA- financial strength rating was affirmed, but its outlook was upgraded to stable from negative. Allianz S.E. kept its AA financial strength rating and its stable outlook. Paris-based AXA Group\'s AXA France Vie also retained its AA financial strength rating and negative outlook, while Aviva International Insurance Ltd. remained AA- with negative outlook.

"GMIs active in property/casualty insurance should be able to continue to effectively manage the cycle, resulting in combined ratios comfortably below 100%, barring any major catastrophe losses and without substantially reducing loss-reserve strength," S&P analysts said in a statement.