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Fitch Affirms CAMCA Assurance and CAMCA Reassurance's IFS at 'A'; Outlook Positive
April 12, 2017 / 12:30 PM / 7 months ago

Fitch Affirms CAMCA Assurance and CAMCA Reassurance's IFS at 'A'; Outlook Positive

(The following statement was released by the rating agency) LONDON, April 12 (Fitch) Fitch Ratings has affirmed CAMCA Assurance's (CAA) and CAMCA Reassurance's (CAR) Insurer Financial Strength (IFS) ratings at 'A' and Issuer Default Ratings (IDR) at 'A-'. The Outlooks are Positive. Both companies are domiciled in the Grand Duchy of Luxembourg and are ultimately owned by Credit Agricole's (CA; A/Positive) 39 regional banks. KEY RATING DRIVERS The affirmation reflects the companies' high integration within CA due to their role in insuring the group's guaranteed housing loans. Both companies rely on their parent for their role, business position and strategic direction. Fitch expects CA, through its regional banks, to provide support if case of need. The Positive Outlook on both companies is directly linked to that on CA. CAA's premiums collected increased by 16.5% in 2016 following the strong growth of the insurer's core business line: guarantees of housing loans. The business mix is heavily dominated by guarantees (93% of total premiums), followed by construction insurance with 5% of total written premiums in 2016. In a growing market, CAA has continued to strengthen its market position and improved the penetration rate in CA's home loans portfolio. Both companies posted solid net combined ratios in 2016 (CAA: 90.4%; CAR; 75.9%) and positive operating results (CAA: EUR21.7 million; CAR: EUR11.2 million), despite strong growth in premiums. CAA reported a stable net profit of EUR13.8 million. CAR's net profit before allocation to the equalisation reserve returned to positive levels at EUR15.5 million (negative EUR20.7 million in 2015). Fitch considers both entities' risk profiles are sound, and expects both companies to continue applying strict underwriting practices in light of the current difficult macroeconomic environment and high unemployment in France. This prudent approach in underwriting business results CAA's default rates being structurally lower than the national average. The Solvency II ratio is adequate for CAA at 130% (2015: 148%) and very high for CAR at 1,030% at end-2016. The capitalisation of both companies supports the ratings. Fitch expects CAA to preserve a Solvency II ratio above 100%, or to be supported by CA if needed. Fitch views the investment policy of both insurers as cautious. They invest only in high-quality assets, mostly in fixed-income securities (94% of total investments at end-2016, 93% in 2015), including around 75% invested in bonds rated in the 'AAA' and 'AA' categories and less than 6.5% of investments rated 'BBB' or below. The agency does not expect significant changes to their investment strategy in the medium term, as asset allocation is defined at the group level. RATING SENSITIVITIES Given the integration of both entities within CA, any changes to their parent's ratings would be reflected in CAA and CAR's ratings. Any material deterioration in the prospect of support for these companies from their parent could lead to review the strategic importance granted to CAA and CAR, and by extension to their captive status, that could lead to a downgrade. Contact: Primary Analyst Louis Nonchez Associate Director +33 144 299 176 Fitch France S.A.S. 60 rue de Monceau 75008 Paris Secondary Analyst Federico Faccio Senior Director +44 20 3530 1394 Committee Chairperson Stephan Kalb Senior Director +49 69 768076 118 Media Relations: Athos Larkou, London, Tel: +44 203 530 1549, Email: Additional information is available on Applicable Criteria Insurance Rating Methodology (pub. 15 Sep 2016) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here Solicitation Status here#solicitation Endorsement Policy 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 WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. 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In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch’s factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch’s ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided “as is” without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. 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