CCR Re outlook turns positive as reinsurer put up for sale at $1bn value

CCR Re’s credit and financial strength ratings have been placed on watch positive on talks of  potential acquisition by a consortium of French mutuals SMABTP and MACSF.

S&P Global Ratings has placed its 'A-' issuer credit and financial strength ratings on CCR Re, and its issue ratings on the reinsurer's debt, on CreditWatch with positive implications.

The CreditWatch placement follows Caisse Centrale de Reassurance's announcement that it is negotiating to sell a majority stake in CCR RE to a consortium made up of SMABTP (A+/Stable/--) and MACSF (not rated).

The proposed transaction will see French government backed CCR initially dispose of approximately 70% of CCR Re’s capital, valuing CCR Re, based on economic share equity, at close to €1 billion before the €200 million capital increase. After these measures, the consortium would hold a 75% stake in CCR Re. S&P expects SMABTP to be the majority shareholder of CCR Re and to consolidate the entity in its financial accounts.

“We expect this deal would benefit CCR Re's creditworthiness if it proceeds, which we think is likely,” S&P said, adding that it anticipates SMABTP to bring additional financial support to CCR Re, “which we would reflect by one additional notch of support in our ratings on the reinsurance company.

“We believe the capital increase, as a financing resource, will support CCR RE's growth ambitions given the hardening reinsurance market.”

The transaction is subject to final agreements and regulatory approvals. S&P expects the transaction will receive these approvals once both sides have agreed on a deal.

“The CreditWatch placement reflects the high probability that we will raise our ratings on CCR Re after the transaction's close, likely within the next six months, by one notch to 'A',” S&P said. “This reflects that we would consider CCR Re as a strategically important subsidiary to SMABTP. Therefore, our ratings on CCR RE could benefit from up to three notches of support, capped one notch below the parent company rating.”

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