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April 24 (The following statement was released by the rating agency)
Fitch Ratings has affirmed Camca Assurance's (CAA) and Camca Reassurance's (CAR) Insurer
Financial Strength Ratings (IFS) at 'A' and their Issuer Default Ratings (IDR) at 'A-'. The
Outlooks are Stable.
Both companies, domiciled in the Grand Duchy of Luxembourg, are owned directly
and indirectly by the 39 banks of Credit Agricole (CA; A/Stable).
KEY RATING DRIVERS
The affirmation reflects the companies' large degree of integration within the
CA group, given their role in guaranting the group's guaranteed residential
loans. Both companies are reliant on their parent for their role, business
position and strategic direction. Their ratings are therefore mainly driven by
The Stable Outlook for both companies is directly linked to that of CA group.
Nevertheless, Fitch expects that their capital and earnings will remain
resilient in the next 12-24 months, supported by a strict underwriting
discipline in light of the current weak economic environment, including limited
mortgage funding availability and likely high French unemployment. Fitch expects
that CA's regional banks would provide support, if needed, to their insurance
Fitch considers CAA's credit profile to be sound, as evidenced by low defaults
on its guaranteed insurance business for residential loans. CAA's net combined
ratio deteriorated to 85% at FYE13 (end 2012: 68%) but remained at a sound
level. With EUR151m gross written premiums (GWP), CAA posted a EUR15m net profit
for 2013, up 12% on 2012. CAA's financial revenue increased 22% yoy in 2013 and
the company reported EUR11m capital gains. CAR's combined ratio, on the other
hand, sharply improved to 87.5% from 171%, following a material decrease of its
loss ratio due to provision releases.
Fitch views CAA's capital resources as strong. Regulatory solvency ratios
strengthened to 2.7x the minimum required by the regulator. At end-2013 CAR
regulatory solvency was slightly below the minimum required at 98%. However,
CAR's reported solvency position is supplemented by its substantial equalisation
reserve (EUR128m at end-2013), which Fitch considers to be loss-absorbing
capital. When taking into account the sizeable equalisation reserve, CARs'
solvency ratio was 1,390% at end-2013. In March 2014 CAR issued intragroup
EUR500,000 subordinated debt to increase its statutory solvency cover slightly
to above 100%.
Any changes to their parent's ratings will be reflected in CAA's and CAR's
ratings. Any material deterioration in the prospect of support for these
companies from their parent could lead to a downgrade.