DBRS has announced that it:
has today downgraded Power Corporation of Canada’s (POW or the Company) Senior Debt rating to “A” from A (high) and its Preferred Shares ratings to Pfd-2 from Pfd-2 (high) due to the application of the new insurance methodology. All trends are Stable. All the rating actions are detailed in the table below. The rating actions taken today follow the publication of DBRS’s new methodology, “Global Methodology for Rating Life and P&C Insurance Companies and Insurance Organizations” (December 2015) (Global Insurance Methodology).
The downgrade of POW’s ratings results from the application of the Global Insurance Methodology. POW’s main subsidiary is Power Financial Corporation (PWF), which in turn owns Great-West Lifeco Inc. (GWO), the greatest contributor to earnings and overall strength of PWF. Hence, the Global Insurance Methodology used to rate GWO is by extension the primary methodology for rating POW.
The ratings for POW are one notch below PWF’s ratings under the holding company criteria due to structural subordination. Additionally, PWF’s rating has been set at the same level as GWO’s Issuer Rating. See the press releases for Power Financial Corporation, “DBRS Downgrades Power Financial Corporation’s Issuer Rating to A (high) from AA (low); Confirms Great West Life Assurance Co at AA”, “DBRS Confirms The Great West Life Assurance Company Ratings at AA; Downgrades Great-West Lifeco’s Debentures to A (high) from AA (low)”, for more information.
POW is an investment holding company controlled by the Desmarais family with PWF as its major holding. Other interests include Square Victoria Communications Group, Power Energy, the Sagard investment funds and other investments. POW benefits from a strong capital position, high liquidity and prudent decision-making with an emphasis on conservativeness and integrated risk management. Negative ratings pressure may arise if the subsidiaries suffer extended declines in profitability or more unlikely, if the Company deviates significantly from its value-based approach to leadership and away from its successful operational track record. POW’s ratings could also be negatively impacted by evidence of governance issues. Conversely, an upgrade of PWF could potentially benefit POW’s rating.
The new methodology is discussed in the post DBRS Releases and Applies New Insurance Company Methodology.
Affected issues are: POW.PR.A, POW.PR.B, POW.PR.C, POW.PR.D, POW.PR.F and POW.PR.G.
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POW: DBRS Downgrades to Pfd-2
DBRS has announced that it:
The new methodology is discussed in the post DBRS Releases and Applies New Insurance Company Methodology.
Affected issues are: POW.PR.A, POW.PR.B, POW.PR.C, POW.PR.D, POW.PR.F and POW.PR.G.
This entry was posted on Friday, December 18th, 2015 at 12:51 am and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.