Ratings agency Standard & Poor's this week downgraded the credit rating of Groupama's mutual parent company to A from A+, blaming the French insurer's deteriorating operating performance.
S&P said there was little chance of immediate improvement in Group-ama's operating performance, mainly because of problems restructuring and integrating its French acquisition, Gan Incedie Accidents.
The winter storms in France in December 1999 that caused around £1.15bn worth of damage also dented Groupama's operating performance.
But Groupama claims the restructuring process after acquiring Gan in July 1998 was always expected to take time.
Groupama corporate office director Paul Picknett said: “We don't normally comment on any of the ratings agencies' comments. Those are their analyses of situations.
“But we have always said it would take three to five years to integrate Gan into the company.”
S&P's downgrading was not all bad news for Groupama. The ratings agency said its outlook was stable and said its capitalisation remained strong.
Picknett added: “Our capitalisation stands very solid after storms which were the worst for 150 years in France. They made the storms in the UK look like a strong wind.”
Excluding losses for the storms, Gan made losses of £64m, while Groupama's net profit was £120m.
The ratings agency claimed Groupama's management would be hard-pushed over the coming months to implement radical changes.
S&P said: “Profits at Groupama are unlikely to improve significantly in 2000, owing to additional claims relating to the 1999 windstorms. S&P believes that management's 8% return on equity will be difficult to achieve within two or three years.”
