S&P Lowers Groupama Ratings

October 5, 2000

Standard & Poor’s announced that it had lowered the financial strength and counterparty credit ratings to “single-A from single A plus” for CCAMA, the parent company of France’s Groupama insurance group, related entities, and the groups in-house bank Banque Finama.

“The rating actions are based on the group’s weak performance, which is unlikely to improve in the near future. Standard & Poor’s believes the problem is linked to management’s difficulties in fully restructuring and integrating GAN Incendie-Accidents (GAN IA) nonlife operations and distribution network,” said the announcement.

Groupama took over GAN in 1998, and it has adversely affected group operations, recording a 700 million franc ($94.5 million) loss in 1999, which impacted on overall results, reducing return on equity to 4.4 percent.

While Groupama’s capitalization remains “very strong,” it derives 82 percent of its revenues from the French domestic market, and S&P notes that to improve performance it must restore underwriting discipline “to the GAN IA tied-agent distribution network.”

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