S&P Lowers EulerHermes Group to ‘AA’ for Technical Reasons

Standard & Poor’s announced that it has lowered its long-term counterparty credit and insurer financial strength ratings on the main operating entities of the Euler&Hermes Group, which specializes in credit insurance, to double-‘A’ from double-‘A’-plus, including those on EULER- SFAC (France) and Hermes Kreditversicherungs-AG (Germany).

S&P explained that, “This rating action has been triggered by a change in Standard & Poor’s group methodology for analyzing financial services groups, published on April 23, 2002. The outlook is stable.”

S&P said the new criteria were meant to imply a rating differential between “core” and “strategically important” subsidiaries of the same financial services group. Previously, such subsidiaries could be assigned the same rating.

Specifically, “The new criteria limit the amount of support provided to a strategically important subsidiary to within one notch of the parent’s rating, in this case ultimately Germany-based composite insurance group Allianz AG, which is currently rated ‘AA+/Neg/A-1+’,” explained Laura Santori, an associate director in S&P’s Paris office. “Standard & Poor’s has not, however, changed its assessment of the standalone characteristics of Euler&Hermes,” she added.