S&P upgrades Groupama UK to BBB

Rating agency Standard & Poor’s (S&P) has upgraded UK insurer Groupama Insurances’ financial strenth rating to BBB from BB following its sale to Ageas.

An upgrade to the triple-B range had been expected following the completion of the deal.

But the agency has also withdrawn the rating, because Groupama Insurances is no longer part of its previous parent group, Groupama SA.

Groupama Insurances’ rating was previously constrained by that of its French parent, Groupama SA. S&P rated Groupama SA BB-.

The upgraded BBB rating reflects Groupama Insurances’ rating as a standalone company following the separation from its parent.

Following the withdrawal of the rating, Groupama Insurances now has the same BBBpi rating as its new sister company Ageas Insurance. Unike S&P’s full ratings, those with a ‘pi’ suffix are based solely on publicly available information.

S&P said the upgrade to BBB before the withdrawal refected Groupama Insurances’ “good” standalone credit characteristics.

The agency said in a statement: “These include its good and stable capitalisation, a good and improving operating performance, a conservative investment portfolio, and a good competitive position.”

It added, however: “Partially offsetting these strengths are the long-term uncertainty surrounding the insurer’s underperformance in its commercial motor and property accounts and Groupama UK’s concentration in the very competitive UK motor insurance market, from which it derived 51% of its premiums in 2011.”

Ageas UK chief executive Barry Smith said: “This is good news for brokers and customers as it creates additional stability and certainty for them to continue to trade with Groupama Insurances. They now have independent confirmation that they are dealing with a financially strong and well capitalised business geared towards meeting their needs.”

Groupama Insurances chief executive François-Xavier Boisseau added: “We have a strong and profitable business which has robust solvency levels and it is very pleasing that Standard & Poor’s have confirmed this today. Our brokers have been very supportive as we have continued to trade strongly with them. I would like to thank our brokers again for their support and look forward to working with them during 2013.”