Standard & Poor’s Ratings Services has said that its ratings and outlook on Germany’s global reinsurer Munich Reinsurance Co. (current ‘AA-‘ Stable outlook) and related core entities “are unaffected by the marked decline in the group’s third-quarter earnings” (See related article).
Munich Re’s Q3 earnings fell sharply to €12 million ($15.4 million) from €1.2 billion ($1.555 billion), which S&P noted, reflected “further write-downs on investments and significant natural-catastrophe losses.”
S&P stated that, “given the extremely turbulent financial markets, which have so far hit most insurers and reinsurers, Munich Re’s results are well within our expectations. Despite the current financial market conditions, Munich Re’s capitalization and competitive position remain very strong, which we think leaves the group well placed to benefit from the more favorable underwriting environment we believe will emerge in 2009.
“Our risk-based capital model indicates that Munich Re’s capitalization for the financial year ending Dec. 31, 2008, will likely substantially exceed our requirements for a ‘AA’ rating.”
The rating agency added that the “extent of the turbulence seen in financial markets this year has been such that we view it as a ‘capital event’, which means that our analytical focus will be on the resilience of an entity’s capitalization to investment-related losses, rather than on its earnings.”
Source: Standard & Poor’s – www.standardandpoors.com
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