Standard & Poor’s Ratings Services said it affirmed its ‘BB-‘ long-term counterparty credit and insurer financial strength ratings on French insurer Groupama S.A. and its guaranteed subsidiaries. S&P also affirmed the ‘B+’ long-term counterparty credit and insurer financial strength ratings on strategically important subsidiary Groupama GAN Vie. The ‘BB-‘ long-term counterparty credit rating was affirmed as well as the ‘B’ short-term counterparty credit rating on banking subsidiary Groupama Banque. S&P removed all the ratings from CreditWatch with negative implications, placed on Oct. 9, 2012.
At the same time the rating agency affirmed their ‘C’ issue rating on Groupama’s 2007 junior subordinated notes. The ‘CCC’ issue ratings on Groupama’s 2005 and 2009 junior subordinated notes were also affirmed. The ‘CCC’ ratings from CreditWatch negative were removed, placed on Oct. 9, 2012.
All ratings were subsequently withdrawn at Groupama’s request. The outlook at the time of the withdrawal was negative.
At the time of withdrawal, the ratings on French insurer Groupama and its guaranteed subsidiaries reflected Standard & Poor’s view of the group’s weak risk-adjusted capital adequacy and weak risk management practices, according to Standard & Poor’s criteria, and the negative consequences of past financial and operational management decisions. Only partially offsetting these weaknesses is the agency’s view of Groupama’s good competitive position in the French property and casualty market and its good liquidity profile.
The affirmation reflects Groupama’s ongoing actions to strengthen its solvency position, mostly via the sale of several subsidiaries and the reduction of the group’s equity and real estate exposures. S&P also understands that Groupama expects to achieve its regulatory solvency ratio target of 120% at year-end 2012. Based on the latest available information, Groupama had a sizeable €1.8 billion of cash and cash equivalents on its balance sheet at midyear 2012.
The outlook at the time of the withdrawal was negative, reflecting S&P’s opinion on the potentially negative impact that Groupama’s decision not to pay the coupon on its hybrid debt issued in 2007 may have on the group’s creditworthiness and, in the longer term, on its business and financial profile (for further details, see “French Insurer Groupama Ratings Lowered On Announced Coupon Nonpayment On 2007 Hybrids; All Ratings On Watch Negative,” published Oct. 9, 2012.