PARIS, Oct 9 (Reuters) - Ratings agency Standard & Poor's downgraded French mutual insurer Groupama's debt by five notches to "CC" from "B", citing the company's recent decision to skip a coupon payment.
Groupama, which has been selling assets after taking a big hit on its Greek debt holdings, said last Friday it had decided to skip a coupon on 1 billion euros ($1.3 billion) of subordinated bonds, adding that the move did not constitute an event 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's financial flexibility, adding that it could also affect the company's ability to retain clients.
Fitch Ratings expressed similar concerns last Friday when it downgraded three of Groupama's hybrid debt instruments as well as its IFS ratings.
When it announced the missed payment on Friday, Groupama said the move was part of a broader plan put in place at the beginning of the year designed to improve its financial strength.
Groupama's decision to skip the payment came after several other moves to shore up its finances over the past year, including moves to sell businesses in the UK, Poland and Spain as well as the property and casualty activities of its Gan Eurocourtage unit.
The insurer last year fired its longstanding chief executive, saying the new management's priority would be to reinforce its solvency. ($1 = 0.7754 euros)
(Reporting by Christian Plumb; Editing by David Holmes)
Keywords: GROUPAMA S&P