Groupama down to A

GROUPAMA has had its financial strength rating lowered to A from A+ by Standard & Poor’s (S&P). The insurer’s ratings have also been assigned a negative outlook. “The downgrade reflects our view that Groupama’s capital adequacy has weakened, mainly because of the sharp decline in the market value of its equity holdings over the past year, and that financial flexibility is constrained,” said S&P credit analyst Virginie Crepy. “We believe Groupama’s earnings generation capacities, although still strong, and expected management actions are unlikely to restore capital adequacy to a level we deem commensurate with A+ ratings.” Crepy said S&P believes Groupama has been affected more than its peers by market conditions, largely because its exposure to equity investments represented 20% of its investment portfolio in 2008. “The negative outlook reflects our opinion that Groupama’s large equity portfolio, which could expose it to further writedowns given the volatile capital markets, makes it challenging for the group to restore capital adequacy to strong levels,” she said.