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FOR IMMEDIATE RELEASE
AMSTERDAM - DECEMBER 18, 2020 10:10 AM (EST)
AM Best has affirmed the Financial Strength Rating of “A” (Excellent) and the Long-Term Issuer Credit Rating of “a+” of Covéa Coopérations (Covéa Coop) (France), which is the intermediate holding company and the principal inward reinsurance vehicle for Société de Groupe d’Assurance Mutuelle Covéa (Covéa SGAM). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Covéa SGAM’s balance sheet strength, which AM Best categorises as strongest, as well as its adequate operating performance, favourable business profile and appropriate enterprise risk management.
Covéa SGAM’s balance sheet strength assessment is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), as well as a liquid and conservative investment portfolio and prudent reserving practices. As an affiliation of mutuals, Covéa SGAM does not pay dividends, allowing it to retain its earnings within the group. Excess capital is held throughout the group; within the operating entities, the mutual members and Covéa Coop. To improve capital fungibility, Covéa Coop holds letters of credit issued by the mutual members and operating entities, allowing it to reallocate the group’s capital quickly as needed.
Covéa SGAM has a track record of consistently profitable earnings, with an average return on equity of 6.2% for the five-year period ending in 2019. The earnings profile exhibits low volatility and is balanced, with positive contributions from technical results, investment income and realised gains. AM Best expects Covéa SGAM’s 2020 results to be affected by losses related to the COVID-19 pandemic, driven by claims for business interruption, although an overall profit is still expected.
Covéa SGAM’s favourable business profile assessment is underpinned by its strong presence in the French market, with a large, well-established member base and strong distribution capabilities. The group benefits from its leading position in various non-life lines in its domestic market. While the French market is very competitive, the group has consistently defended its market share while producing positive technical results.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.