A.M. Best Co. has downgraded the financial strength rating (FSR)and issuer credit rating (ICR) of Lehman Re Limited for the secondtime in a week, due to the status of its parent company, LehmanBrothers Holding Inc.

Last week, the rating agency lowered the Hamilton, Bermuda-basedreinsurer's FSR to "A-minus" from "A" and ICR to "a-minus" from"a." Now A.M. Best announced it has lowered the FSR again to "B"and the ICR to "bb." The outlook for both ratings remainsnegative.

The latest rating decision, Oldwick, N.J.-based Best said, is inresponse to Lehman Brothers' petition for Chapter 11 bankruptcyprotection. Best noted that Lehman Re is not in the bankruptcypetition, but said the status of Lehman Brothers "could have asignificant adverse impact on Lehman Re."

In last week's rating action, which was also connected to thestatus of Lehman Brothers but occurred before the bankruptcypetition, Best said, "While A.M. Best believes that Lehman Re'scurrent stand-alone capital position adequately supports itsratings, the negative perception surrounding the parent company maypotentially impact Lehman Re's ability to attract and retainbusiness."

Best analyst Richard Baldwin said last week that Lehman Re'sratings have always come with an understanding that the reinsurerwould enjoy support from Lehman Brothers, if necessary. Given thecondition of Lehman Brothers, however, Mr. Baldwin said it is notnow in the same position to raise capital to transfer to LehmanRe.