A.M. Best Affirms Ratings of Groupama S.A. and Its Subsidiaries.OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of A (Excellent) and the issuer credit rating (ICR (Intelligent Character Recognition or Image Character Recognition) The machine recognition of hand-printed characters as well as machine printing that is difficult to recognize. ) of "a" of Groupama S.A. (Groupama) (France) and its rated subsidiaries, Groupama Vie and Groupama Transport. A.M. Best has also affirmed the debt rating of "bbb+" for the subordinated notes issued by Groupama. The outlook for all ratings remains stable. Excellent consolidated risk-adjusted capitalisation--A.M. Best believes that consolidated risk-adjusted capitalisation remains excellent as retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. and the issuance of a EUR EUR In currencies, this is the abbreviation for the Euro. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 500 million (USD USD In currencies, this is the abbreviation for the U.S. Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 595 million) subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". offset higher capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. for the anticipated strong growth in the life business. However, Groupama has plans to make acquisitions abroad, although there are uncertainties regarding the financial impact of this projected foreign expansion. The timeframe for the planned initial public offering (IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. ) remains uncertain, but it could lead to additional financial flexibility. Improving operating performance--A.M. Best expects Groupama's consolidated net earnings to increase by approximately 10% from the EUR 359 million (USD 490 million) achieved in 2004, mainly as result of excellent earnings from its growing life portfolio. Groupama has also realised operational efficiencies from the restructuring achieved so far. In the non life business, the combined ratio is expected to stabilise at approximately 101% in 2005 as the effects of better underwriting discipline and improved cost controls are offset by pressures on premium rates in the French motor market, as market rate increases are currently lower than claims inflation. A.M. Best also expects the contribution to earnings from asset management operations (EUR 10.9 million (USD 14.9 million) in 2004) to become gradually more significant, whilst retail banking operations will take several years to break even. Leading business position--A.M. Best believes that Groupama will be able to maintain its strong position in its domestic market where it is the fifth largest insurer, with total consolidated gross written premiums anticipated to grow by approximately 4% to EUR 13.2 billion (USD 16.4 billion) in 2005. In A.M. Best's opinion, the non life business will show a modest growth of approximately 2%, but the life business will benefit from the stronger market demand in 2005, due mainly to a more competitive policyholder dividend policy, with gross written premium expected to increase by approximately 5% to EUR 4.1 billion (USD 5.1 billion). Groupama is also likely to achieve a larger geographical diversification outside France in the medium term through acquisitions in the growing markets of Southern and Eastern Europe Eastern Europe The countries of eastern Europe, especially those that were allied with the USSR in the Warsaw Pact, which was established in 1955 and dissolved in 1991. . The ratings of Groupama Vie and Groupama Transport reflect the full rating enhancement from the implicit support of the parent company. For Best's Debt Ratings, all other Best's Ratings Best's rating A rating A.M. Best Co. assigns to insurance companies based on the company's ability to meet its obligations to its policyholders. , an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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