Ratings Roundup: CIBC Re, Groupama, Ballantyne Re

A.M. Best Co. has assigned a financial strength rating of ‘A ‘(Excellent) and issuer credit rating (ICR) of “a” to CIBC Reinsurance Company Limited (CIBC Re), based in St. Michael, Barbados, with a stable outlook. “The ratings reflect CIBC Re’s consistent trend of strong profitability, excellent capitalization and favorable liquidity position,” said Best. “CIBC Re’s excellent financial strength is founded on a track record of superior profits, singular focus on specific lines of creditor business, disciplined underwriting practices and adherence to conservative investment practices. Conservative but focused operations and diligent attention to the business model have resulted in consistently favorable earnings.” CIBC Re’s parent is the Canadian Imperial Bank of Commerce.

Standard & Poor’s Ratings Services noted that the ratings on French insurer Groupama S.A. and its core subsidiaries (insurer financial strength rating A+/Stable) are unchanged by its proposed €617 million ($900 million) acquisition of 100 percent of Hungarian insurer OTP – Garancia Biztosito Rt (BBBpi/–/–) from Hungary-based OTP Bank Rt. (core operating entities BBBpi/–/–). S&O also noted that Groupama will acquire 5 percent to 8 percent of OTP Bank shares at an estimated cost of €500 million ($728.5 million). The rating agency indicated that it considers the “deal to be in line with Groupama’s established international growth strategy and aim to increasingly dilute its exposure to the French property/casualty market. The acquisition, if successful, would reinforce Groupama’s existing franchise in Hungary where the group was already present through Groupama Bistozito (not rated).”

Standard & Poor’s Ratings Services has lowered its subordinated debt ratings on Ballantyne Re plc’s Class B-1 and B-2 notes to ‘CCC-‘ from ‘B-‘. The notes remain on CreditWatch with negative implications where they were placed on Sept. 14, 2007.
S&P also said that its Class A-1 notes on Ballantyne Re would remain on CreditWatch with negative implications, where they were placed on Nov. 21, 2007. “We took these actions in response to the continuing mark-to-market losses experienced on the assets in the underlying collateral accounts,” explained S&P credit analyst Gary Martucci. “Since Nov. 21, mark-to-market losses have increased, putting additional strain on the structure. Interest on the Class B notes continues to accrue but has remained unpaid since Sept. 4, 2007, and market value declines, if realized, will put these notes at an increasing likelihood of having losses sometime in the future.”