Groupama UK reported strong underwriting results as combined operating ratio fell more than five points to 99.2% for the first half of this year, but the wider group came under pressure today from the crisis in the eurozone.
Groupama's UK revenues remained broadly flat at 273m euros for the half year, as combined ratio fell to 99.2% (2011) compared to 104.9% (2010).
The UK result was even better than the group, which fell three points from 100 to 97.
However, the improvement in COR came as the group had its debt downgraded by Fitch.
Fitch downgraded Groupama's financial strength ratings to A- from A and assigned a negative outlook.
It has also downgraded the ratings of four of the insurer's core subsidiaries: Groupama GAN Vie, GAN Assurances, GAN Eurocourtage and Groupama Transport.
The agency said its view of Groupama's capital adequacy had deteriorated as a result of its continued exposure to southern European government debt. The insurer is materially exposed to these assets through holdings at local subsidiaries as well as through holdings at French entities, Fitch said.
The agency added that Groupama's exposure to investments in volatile asset classes, including equities, is higher than peers and has resulted in the weakening of capital adequacy following volatility in the financial markets.
Fitch could downgrade the ratings further if the group's financial profile deteriorates further or its efforts to improve underwriting fail to produce sustainable, strong, non-life and life performance.
Fitch's action follows a downgrade of Groupama by fellow rating agency Standard & Poor's (S&P) in May to BBB+ from A-. S&P also cited Groupama's sovereign debt exposure as a reason for the downgrade.
S&P downgraded Groupama to A- from A last July, citing falling earnings prospects and the insurer's capital adequacy.
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