Standard & Poor’s Ratings Services has affirmed its ratings on Brascan Financial Corp. citing its strong financial fundamentals, but it warns that sector concentration remains an issue.

S&P says that the company’s current focus is on expanding its asset management business with the intent of conducting much of its business activity through funds managed on behalf of the company and its institutional investors. It currently manages about $5 billion of on-balance-sheet assets (consolidated), and about $4 billion in assets for third parties.

“The ratings on Brascan Financial reflect the strong and consistent growth in core earnings, good debt-to-equity and debt-to-total capitalization ratios, and specialized industry knowledge in the niche markets in which the company chooses to do business,” said Standard & Poor’s credit analyst Donald Chu. In addition, Brascan Financial has an experienced and flexible management team and enjoys a very good working relationship with Brascan Corp. and its related companies, S&P says.

The rating agency says that Brascan Financial’s liquidity is considered strong given its current level of cash and marketable securities, and its demonstrated diversity of its funding sources.

But S&P cautions that the company faces challenges such as sector concentration, maximizing returns for a given level of risk, and continuing to boost earnings in a very competitive environment. In addition, despite an increase in the amount of business conducted with third parties, the company still has a significant concentration of assets invested in and revenues from the Brascan group of companies, it notes.

Still, it maintains a stable outlook for the company’s ratings, based on Standard & Poor’s expectation that Brascan Financial’s consistent financial performance will continue throughout the business cycle.