Standard & Poor's has upgraded Provident Insurance following the FSA’s approval of its takeover by MMA parent company Covea.

The agency has placed the motor specialist on a 'BBB', two notches up from its previous 'BB+' rating.

The upgrade reflects S&P’s assessment that, following the official completion of Provident’s acquisition by MMA Holdings, its ratings are no longer constrained by those on its previous parent, Ally Financial Inc. (B+/Stable/C; formerly GMAC).

“We are, therefore, raising the ratings on Provident Insurance by two notches to match its stand-alone credit profile,” said S&P, which assessed Provident’s outlook as ‘stable’.

The improved ratings reflect the agency’s view of its continued good stand-alone credit characteristics, including its very conservative investments and strong capitalization.

“We assume in our ratings that the new owners will sustain these strengths in Provident Insurance's financial profile.”

However S&P said the fly in the ointment was continued industry and underwriting performance pressures, which could drag down its performance to the weaker levels seen in 2009.

Conversely, a demonstrable strengthening of the company's competitive position and a recovery in the company’s earnings could see a positive move in the company’s rating.