Fitch Rates Groupama S.A.'s EUR1.1bn Undated Subordinated Notes 'BB'

Fri May 23, 2014 11:50am EDT

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(The following statement was released by the rating agency) PARIS/LONDON, May 23 (Fitch) Fitch Ratings has assigned Groupama S.A.'s EUR1.1bn undated subordinated notes a final 'BB' rating, following receipt of final documentation which conforms with information previously received. KEY RATING DRIVERS The bond's rating is notched down two levels from Groupama S.A.'s 'BBB-' Long-term Issuer Default Rating (IDR), in line with Fitch's criteria. The proceed of the issue will be used in priority to redeem existing debt. The proposed issue has no maturity but a first call date in May 2024. The securities will pay a 6.375% fixed annual coupon for 10 years. The notes are subordinated to senior creditors and senior to deeply subordinated notes. The company has the option to defer coupon payments on a cumulative basis if the regulatory solvency margin ratio falls below 100% or if the regulator deems it necessary in view of its assessment of the financial condition of the group with applicable supervisory regulations. According to the terms and conditions, the new bond qualifies for 50% perpetual subordinated debt limit under Solvency 1 and is expected to be grandfathered as restricted Tier 1 capital under Solvency 2. Under Fitch's methodology, this instrument will classify as 100% capital within Fitch's risk-based capital assessment and will classify as 100% debt in Fitch's financial leverage calculations. Groupama S.A.'s financial leverage ratio is expected to remain within a range that is compatible with the group's current rating. RATING SENSITIVITIES The debt rating is subject to the same rating factors that might affect Groupama S.A.'s rating. Key rating triggers that could result in an upgrade include a sustained improvement in profitability, with annual net income above EUR200m on average over the cycle, together with no material deterioration in solvency or financial leverage from current levels. Groupama S.A.'s other ratings, which are unaffected by today's action, are as follows: Insurer Financial Strength: 'BBB'; Outlook Positive Long-term IDR: 'BBB-'; Outlook Positive Contact: Primary Analyst Marc-Philippe Juilliard Senior Director +33 1 44 29 91 37 Fitch Ratings S.A.S. 60 rue de Monceau 75008 Paris Secondary Analyst Amelie Hibos Analyst +33 1 44 29 91 78 Committee Chairperson Federico Faccio Senior Director +44 20 3530 1394 Media Relations: Hannah Huntly, London, Tel: +44 20 3530 1153, Email: hannah.huntly@fitchratings.com. Additional information is available at www.fitchratings.com Applicable criteria, 'Insurance Rating Methodology', dated 13 November 2013, are available at www.fitchratings.com. Applicable Criteria and Related Research: Insurance Rating Methodology here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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