A.M. Best Co. has affirmed its “Superior” ratings on two of France’s largest general insurers. Yesterday it confirmed the A++ (Superior) rating of Assurances Generales de France (AGF), but kept it under review with “negative implications,” and also affirmed Groupama’s A+ (Superior) rating with a “stable outlook.”
Concerning AGF, Best said that the “ratings reflect AGF’s core status to its ultimate parent, Allianz AG, its superior risk-adjusted capitalisation, improving operating performance and superior business profile.”
Best noted that AGF accounts for 26 percent of the Allianz Group’s consolidated net premium income and 30 percent of net its income, and that it has “reported consistent growth in capital and surplus since its acquisition by Allianz in 1997, principally through retained earnings.”
The company has also experienced steady growth, “despite the recent spate of high frequency, high loss events–European storms, events of September 11, 2001, and the AZF explosion.” It had a bottom line profit in 2001 of 717 million Euros ($736 million), a 10.9 percent return on equity.
AGF is a strong player in the French market, with a 12 percent share of the country’s P/C business, and is developing profitable operations internationally as well, notably in the Netherlands, Spain, Belgium and South America. Best expects these factors to continue.
Groupama was noted as having “superior consolidated capitalisation, improving operating performance and leading profile in its core domestic market,” offset by the fact that its activities are essentially limited to France, which “leaves it over-exposed to competitive pressures in a fairly saturated market.”
Best cited an improvement in Groupama’s consolidated operating performance last year, with retained earnings increasing to 159 million Euros ($163 million) from 40 million Euros ($41 million) in 2000. “The extensive portfolio restructuring since the acquisition of GAN in 1998, the exit from several non-strategic markets and the sale of the group’s international reinsurance activities have created a more focused and efficient organisation,” said Best.
The company remains the largest mutual group in France, “providing a broad range of insurance and financial services through a diverse range of distribution channels using two leading brand names, Groupama and GAN,” said the bulletin. The GAN acquisition significantly broadened the Group’s scope by giving it increased access to “an urban client profile” to go with its already strong rural base. It also provided diversification through extensive life and pension operations and additional distribution channels.
Best indicated that it did not expect Groupama to expand outside of France in the near future, but did note that it plans to “further develop its presence in Southern Europe where it has established a good but minor profile and to pursue opportunities in specific high growth sectors in Asia, Latin America and Central Europe. This should ultimately lead to a more balanced and diverse earnings stream.”
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