TEXT-S&P summary: Wagram Insurance Co. Ltd.

Wed Dec 12, 2012 8:59am EST

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Summary analysis -- Wagram Insurance Co. Ltd. --------------------- 12-Dec-2012

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CREDIT RATING: Country: Ireland

Local currency A/Negative/--

Primary SIC: Fire, marine, and

casualty

insurance

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Credit Rating History:

Local currency Foreign currency

15-Dec-2010 A/-- --/--

13-Jan-2009 A+/-- --/--

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Rationale

Wagram Insurance Co. Ltd. (Wagram), the wholly owned, Dublin-based captive subsidiary of electric utility company Electricite de France S.A. (EDF; A+/Stable/A-1+), qualifies as a captive insurer under Standard & Poor's rating criteria. However, as the captive subsidiary of EDF, it does not qualify for the extra support that is afforded to EDF's public rating as a government-related entity (GRE) under our criteria. We consider there to be a "high" likelihood that the Republic of France (unsolicited ratings; AA+/Negative/A-1+) would provide timely and sufficient extraordinary support to EDF in the event of financial distress. We do not expect that this extraordinary support would be made available to the captive and therefore it is rated at a level commensurate with the 'a' stand-alone credit profile (SACP) on its parent.

Wagram is regarded as an integral part of EDF's risk management strategy. It is the sole captive insurer of the EDF group, and solely writes business emanating from the group. Wagram was established in 2004 to offer insurance cover worldwide to EDF companies. In turn, Wagram remains wholly reliant on EDF for the preservation of its competitive position and financial flexibility. Hence, Wagram's fortunes are inextricably linked to those of EDF.

We view Wagram as independent of Irish sovereign risk because most of its assets are held in several highly rated foreign banks, and its liabilities are international.

Outlook

The negative outlook on Wagram reflects the negative pressures on the parent's SACP due to EDF's large-scale, long-term capital expenditures effort, heightened regulatory risk in France, and the increasing CSPE deficit.

The SACP on the parent will determine the ratings on Wagram for as long as Wagram continues to qualify as a captive insurer under Standard & Poor's rating criteria.

Related Criteria And Research

All articles listed below are available on RatingsDirect on the Global Credit Portal.

-- Principles Of Credit Ratings, Feb. 16, 2011

-- Rating Government-Related Entities: Methodology And Assumptions, Dec. 9, 2010

-- Refined Methodology And Assumptions For Analyzing Insurer Capital Adequacy Using The Risk-Based Insurance Capital Model, June 7, 2010

-- Interactive Ratings Methodology, April 22, 2009

-- Rating Captive Insurers, April 13, 2004

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