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S&P upgrades CCR Re despite potential COVID-19 impacts

8th May 2020 - Author: Luke Gallin

S&P Global Ratings has affirmed its ‘AA’ long-term insurer financial strength and issuer credit ratings on state-backed CCR in France, and raised its ratings on CCR Re to ‘A’ from ‘A-‘, while the outlook for both companies is stable.

ccr-re-logoOver the past two years, CCR Re has reported a steady improvement in its technical results, says S&P. The reinsurer is 100% owned by CCR and S&P now considers it to be core to the group, rather than highly strategic.

Of course, both CCR and CCR Re are expected to suffer investment losses as a result of the ongoing COVID-19 pandemic. But in spite of this, S&P still anticipates that the group will maintain a robust capital buffer at the ‘AAA’ level in 2020-2021, while CCR will continue to be supported by a state guarantee because it’s a provider of unlimited reinsurance for nat cats in France.

“We are affirming our ‘AA’ rating on CCR based on its public policy role and upgrading CCR Re to ‘A’ because of its change in group status,” says the ratings agency.

In an effort to tackle the crisis being caused by the pandemic, the French government recently announced a scheme to assist businesses in the country, especially SMEs, to continue their operations and remain afloat despite the uncertainty.

This plan includes the launch of a public reinsurance programme, backed by the state, for trade credit insurance. CCR has been tasked with implementing this scheme, which, according to S&P, shows the vital role the entity plays for the government and for the country’s economy.

Regarding CCR Re, S&P highlights prudent underwriting and an expanding geographical presence and increased diversification between life and non-life business.

“We anticipate that CCR Re may be affected by COVID-19-related claims in 2020, but if we see a global economic recovery, it could achieve a combined ratio below 98% in 2021-2022,” says S&P.

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