French insurer’s ratings were affirmed with negative outlook before withdrawal
Standard & Poor’s (S&P) has withdrawn its ratings of French insurance group Groupama at the company’s request.
The change does not affect its former UK subsidiary Groupama Insurances, which is now owned by Ageas.
S&P gave Groupama an insurance financial strength rating of BB-. The agency also rated subsidiary life insurer Groupama GAN Vie B+ for financial strength.
Groupama asked for the ratings to be withdrawn despite the fact that S&P had affirmed them and removed them from negative credit watch where they were placed on 9 October.
The outlook for the ratings at the time of withdrawal was negative, meaning further downgrades might ensue.
S&P said the ratings at the time of withdrawal reflected its view of the group’s weak risk-adjusted capital adequacy and weak risk management practices, and the negative consequences of past financial and operational management decisions.
Only partially offsetting these weaknesses was Groupama’s good competitive position in the French non-life 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 noted 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 €1.8bn (£1.45bn) of cash and cash equivalents on its balance sheet at midyear 2012.
In addition to the insurance financial strength ratings, S&P had assigned a BB- long term credit rating and B- short term credit rating to Groupama Banque.
S&P also held a series of ratings on the company’s bonds. It rated the 2007 junior subordinated bonds C and the 2005 and 2009 junior subordinated bonds CCC.
These ratings were also all withdrawn.
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