A.M. Best Co. announced that it has downgraded the financial strength rating (FSR) to “B” (Fair) from “A-” (Excellent) and the issuer credit rating (ICR) to “bb” from “a-” of Bermuda-based Rosemont Reinsurance Ltd. Best said: “Both ratings have been removed from under review and assigned a negative outlook.”
“These rating actions follow Rosemont’s recent announcement that discussions to recapitalize the company following losses incurred from Hurricanes Katrina and Rita have ceased, placing the company effectively into run-off,” the announcement continued (See IJ Website Oct. 10). “Without the possibility of attracting new capital, Rosemont no longer has the financial capacity necessary to maintain its current property catastrophe business profile.”
Best also noted that the rating downgrade “considers debt totaling approximately $64 million at June 30, 2005, held at Rosemont’s immediate parent company, Goshawk Holdings (Bermuda) Ltd. (Goshawk Bermuda), a subsidiary of Goshawk Insurance Holdings plc which is traded on the London Stock Exchange. As the only operating subsidiary held by Goshawk Bermuda, in addition to servicing its own loss reserves Rosemont will be the only source of funds available to pay off the parent company’s debt.”
Best had originally placed Rosemont “under review with negative implications on September 8, 2005, due to projected net losses attributable to Hurricane Katrina and adverse development on Hurricane Ivan marine loss reserves.”
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