AM Best releases its latest rating comment on Groupama...
AM Best has affirmed the financial strength rating of A (Excellent) and the issuer credit rating of “a” of Groupama.
Best also affirmed the FSR of A (Excellent) and the ICR of “a” of Groupama Vie and Groupama Transport, and the debt rating of “bbb+” on the €500m perpetual subordinated notes and the €750m subordinated notes due in 2029 issued by Groupama. The outlook for all the ratings remains stable.
The agency cited Groupama's excellent consolidated risk-adjusted capitalisation, as well as its leading business position in France, although it also highlighted the group's relatively weak performance in the non life sector.
While its capitalisation in 2006 was described as excellent, Best added that it remained sensitive to interest rate changes partly due to the long duration of its bond portfolio.
Groupama is planning to finance its ambitious acquisition plan by an initial public offering, although the timeline is uncertain.
Best expects Groupama's combined net income to increase slightly in 2006 to €550-€600m, mainly driven by stable life earnings. Groupama's non life underwriting performance is likely to slightly improve but will remain relatively weak in 2006 with a combined ratio of approximately 101% in 2006, compared to 102.4% in 2005.
The agency believes that Groupama will maintain its position as the second-largest non-life insurer in France, despite a strong competitive environment. In health and accident, it is likely to strengthen its leading position as it benefits from the partial shift of state-funded health cover to private insurance.
