S&P downgrade to BB prompts review of business relationships
UK brokers are considering whether to continue placing business with Groupama UK following the downgrade of its French parent’s financial strength rating to junk status.
Standard & Poor’s today downgraded Groupama SA to BB from BBB-.
Groupama UK’s capital is ring-fenced from the rest of the group. The company has a 218% solvency margin. However, it does not have a stand-alone S&P rating, and it relies on the rating assigned to its parent.
Brokerbility chief executive Ashwin Mistry said such a downgrade would prompt his company to review “the whole relationship”.
“We’re keeping a watching brief on it. If it’s gone another notch south, then absolutely, we’ll have to make a decision,” he said.
Bluefin chief executive Stuart Reid said although any downgrade was a concern his firm would continue to support Groupama. “Groupama has been a good business to us and a good friend,” he said.
He added: “No decision has been made yet as to what will happen, but it’s information that we treat seriously. We are taking a moment to consider our position and we will treat it with all the seriousness that it deserves.”
However, for some brokers, Groupama’s rating has already passed the acceptability threshold.
Seventeen Group managing director Paul Anscombe said: “If an insurer’s rating is below BBB+ from Standard & Poor’s we will not deal with them going forward.”
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