S&P Affirms CCR’s ‘AAA’ Rating

June 8, 2006

Triple “A” ratings have been on the endangered species list for some time, but they do still exist. Standard & Poor’s Ratings Services has just affirmed its ‘AAA’ long-term counterparty credit and insurer financial strength ratings on French-based reinsurer Caisse Centrale de Reassurance (CCR) with a stable outlook.

It helps of course to be backed by a national government (or Warren Buffett). CCR’s ratings therefore reflect the “extremely strong and consistent support from the Republic of France (AAA/Stable/A-1+),” said S&P.

S&P credit analyst Virginie Crepy further explained that the “ratings on CCR reflect the unlimited guarantee that the majority of its exposure receives from the French state, which covers all large losses incurred on defined uninsurable risks written in France and overseas, in accordance with the French law.”

S&P said the stable outlook on CCR reflects that on the Republic of France. “The maintenance of the rating is based on the expectation that the state will continue its formal and explicit support through an unlimited guarantee on CCR’s core book of business,” Crepy added.

S&P also noted: “In any given year, the nonguaranteed business is expected to remain an ancillary activity, and represent significantly less than 50 percent of CCR’s total gross premium income. CCR is also expected to maintain an extremely strong level of capitalization. CCR’s ratings are not expected to change in the medium term. However, any significant change in the nature or the degree of the French State explicit support could result in a downgrade.”

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