PARIS, Oct 9 (Reuters) - Ratings agency Standard & Poor'sdowngraded French mutual insurer Groupama's debt byfive notches to "CC" from "B", citing the company's recentdecision to skip a coupon payment.
Groupama, which has been selling assets after taking a bighit on its Greek debt holdings, said last Friday it had decidedto skip a coupon on 1 billion euros ($1.3 billion) ofsubordinated bonds, adding that the move did not constitute anevent of default.
S&P, which had cut the insurer's debt to "junk" in June,said the failure to pay the coupon was likely to hurt Groupama'sfinancial flexibility, adding that it could also affect thecompany's ability to retain clients.
Fitch Ratings expressed similar concerns last Friday when itdowngraded three of Groupama's hybrid debt instruments as wellas its IFS ratings.
When it announced the missed payment on Friday, Groupamasaid the move was part of a broader plan put in place at thebeginning of the year designed to improve its financialstrength.
Groupama's decision to skip the payment came after severalother moves to shore up its finances over the past year,including moves to sell businesses in the UK, Poland and Spainas well as the property and casualty activities of its GanEurocourtage unit.
The insurer last year fired its longstanding chiefexecutive, saying the new management's priority would be toreinforce its solvency.($1 = 0.7754 euros)
(Reporting by Christian Plumb; Editing by David Holmes)
Keywords: GROUPAMA S&P