French insurers soon downgraded

After France had lost its triple A rating, the market is expecting a downgrade of the rating of national insurers and reinsurers, especially those detaining a great deal of treasury bills in their balance sheet. The Caisse Centrale de Réassurance (CCR) and Banque Postale, in which the State has a major stake, will be the most threatened ones. On 27 January 2012, the Caisse Nationale de Prévoyance (CNP) has seen its credit rating go down by a notch from AA- to A+.

According to Standard & Poor’s forecasts, private sector insurers will have to endure the same fate. In the event of a downgrade, insurers will have to borrow at higher rates and face problems pertaining to bids from international customers requiring a triple A rating. As their investment quality is affected, their shareholders’ equity will have to be raised, which is likely to trigger an increase in insurance policies tariffs.

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