Recent Ratings Round-up

Due to the significant number of ratings announcements released recently, the IJ offers the following summary of actions taken by the rating agencies indicated. More complete information can be obtained directly from the agencies.

Standard & Poor’s has lowered its counterparty credit rating on Bermuda-based PartnerRe Ltd. to ‘A’ from ‘A+’. It also lowered its financial strength and counterparty credit ratings on Partner Reinsurance Co Ltd. and the other core companies to ‘AA-‘ from ‘AA’. The outlook on all PartnerRe entities was revised to stable from negative.

Standard & Poor’s has affirmed its ‘AA’ financial strength and counterparty credit ratings on Transatlantic Reinsurance Co. and its wholly owned subsidiaries Putnam Reinsurance Co. and Trans Re Zurich (TRZ). Transatlantic Reinsurance Co., Putnam, and TRZ (collectively, TRC) are wholly owned subsidiaries of New York-based Transatlantic Holdings Inc (TRH). The outlook is stable.

Standard & Poor’s has assigned its ‘AAA’ financial strength rating to AIG Czech Republic Posjistovna, A.S. (AIG Czech) “based on explicit support from ‘AAA’ rated American Home Assurance Co., an insurance company that is a wholly owned subsidiary of American International Group Inc.” The outlook is stable.

A.M. Best has affirmed the financial strength ratings of A (Excellent) of Zurich Financial Services Group (ZFS), Switzerland, and its core subsidiaries. It also affirmed the ratings on debt instruments issued or guaranteed by ZFS or its core subsidiaries. The outlook remains positive. The announcement stated, “the ratings reflect ZFS’s improved earnings (earnings in the first half of 2003 were USD 0.7 billion–an improvement of USD 2.7 billion since the first half of 2002), in line with A.M. Best’s expectations; the reduction of the reported half year consolidated combined ratio to 98.8% from 119.7%; excellent business position as a general insurer in its selected core markets (Switzerland, Germany, Italy, Spain, United Kingdom and North America); and excellent consolidated risk-based capitalisation.”

Standard & Poor’s has affirmed its ‘A’ long-term insurer financial strength and counterparty credit ratings on Swedish insurer Lansforsakringar Sak Forsakrings AB (LF SAK), following a review.

Standard & Poor’s has affirmed its ‘A’ financial strength and counterparty credit ratings on U.S.-based PXRE Reinsurance Co. and Bermuda-based PXRE Reinsurance Ltd. (together PXRE). It also affirmed its ‘BBB’ counterparty credit and ‘BB+’ preferred stock ratings on Bermuda-based PXRE Corp., the parent holding company. The outlook was revised to negative from stable. Concurrent with these actions, S&P said it has “assigned its ‘BBB’ senior debt, ‘BBB-‘ subordinated debt, and ‘BB+’ preferred stock ratings to PXRE’s recently filed $150 million universal shelf.” It “expects any issuances under the shelf to be done in such a manner as to maintain the group’s total debt plus preferreds-to-total capital ratio below 50%.”

A.M. Best has assigned a financial strength rating of B++ (Very Good) to Transmarine Insurance Company Ltd, Liechtenstein. The rating outlook is stable. “The rating reflects the company’s superior risk-based capitalisation and very good operating performance. This is offset by the concentration risk associated with Transmarine’s small size and specialisation and significant reliance upon reinsurance protection,” said Best.

Fitch Ratings has assigned a ‘AA’ insurer financial strength rating to Partner Reinsurance Company (Partner Re) and an ‘A+’ long-term rating to Partner Re’s parent, PartnerRe Limited. It has also affirmed PRE’s ‘A’ preferred securities rating and the ‘A’ trust preferred securities rating of PartnerRe Capital Trust I. The Rating Outlook is Stable. Fitch said its ratings “reflect Partner Re’s conservative investment strategy, reserve strength, low level of reinsurance recoverables and low reliance on retrocessional reinsurance.”

Standard & Poor’s announced that it has placed its ‘A+’ financial strength and counterparty credit ratings on Allianz Ins. Co. of Canada and Trafalgar Insurance Co. of Canada (combined AZ Canada) on CreditWatch with negative implications. “The rating implications reflect Standard & Poor’s concerns with AZ Canada’s weak (albeit improving) operating performance and inability to execute a profitable business model during the past two calendar years,” said the bulletin. “Also reflected are Standard & Poor’s concerns for the potential short-term operational risks that AZ Canada may incur though its restructuring and refocusing efforts, as well as Standard & Poor’s concerns for AZ Canada’s strategic importance to ultimate parent, Allianz AG’s (AZAG; AA-/Negative/A-1+) long-term strategy.”

A.M. Best has affirmed the financial strength ratings of B++ (Very Good) of The Citadel General Assurance Company (Toronto) and L’Unique Compagnie d’Assurances Generales (Quebec). Both Canadian companies are wholly owned subsidiaries of Winterthur Insurance Group (Switzerland), the insurance division of Credit Suisse Group of Switzerland. “A.M. Best views The Citadel and L’Unique as separately capitalized entities as the business operations are not strategically integrated with the parent. The rating outlooks for both companies is stable,” said the announcement.