Fitch Ratings has affirmed Luxembourg-based CAMCA Assurance's (CAA) and CAMCA Reassurance's (CAR) long-term issuer default ratings (IDR) at 'A+'. Fitch has also affirmed CAA's and CAR's insurer financial strength (IFS) ratings at 'A+'. The outlooks are negative, according to Fitch. Both companies are owned by Credit Agricole (CA) 39 regional banks (caisses regionals). CA is a cooperative banking group bound by strong and cohesive solidarity mechanisms encompassing its 39 caisses regionales; Credit Agricole S.A. (CA S.A.), the group's listed central body; and Credit Agricole Corporate and Investment Bank (CACIB). Fitch’s view that CAA and CAR (jointly CAMCA) are core captive companies of CA, as the mission and strategic goals of CAMCA are intricately tied to CA's risk management. CA's regional banks will provide support to their core captive insurance subsidiaries. Fitch explains that the support is evident in capital injections by the regional banks of CA into CAA in the past. CAMCA's IFS ratings are therefore aligned with CA's IDR. Fitch assesses the credit profile of CAMCA as strong, which is driven by their stable earnings record and operating model, supportive capitalisation and strong earnings. It expects the premium volume for CAA to have grown in 2020 despite the COVID-19 pandemic. “New business had grown significantly before the onset of the pandemic and pent-up demand has led to volume growth after the end of lockdown. The negative effect of the recession on new business and cost of risk will only be felt once the fiscal-easing measures in response to the pandemic are terminated by the French government,” the rating firm comments. “CAA's gross written premiums showed a 14 per cent y-o-y growth in 2019, mainly driven by a supportive economic environment,” Fitch adds. Fitch expects both CAA and CAR to report solid profits for 2020 on continued low cost of risk. CAA reported a solid 2019 net profit of €14.2 million (2018: €11.4 million). CAR's net profit before allocation to the equalisation reserve was €15.5 million at end-2019 (2018: €24.5 million). The ratings of CAA and CAR are directly linked to the credit quality of CA. A positive change to Fitch's assessment of the credit quality of CA would automatically result in an upgrade of the ratings of both subsidiaries.
