Standard & Poor's Rating Services has cut the rating ofEverest Re to "A-plus" from "double-A-minus."

S&P's New York office, which released the announcement onBermuda-based Everest, said the downgrade to "A-plus" affects thefinancial strength and counterparty credit ratings of thereinsurer's operating subsidiaries. S&P also lowered thecounterparty credit ratings of the holding company to"triple-B-plus" from "A-minus."

The outlook is stable, S&P said, noting that the ratingagency has removed all of these ratings from CreditWatch, wherethey were placed on Dec. 19, 2008 with negative implications.

Explaining the actions, credit analyst Taoufik Gharib said theystem from Everest's "inability to exploit its competitive positionto generate sustainable, strong underwriting and operating resultscommensurate with the former rating."

The rating action, S&P said, was also a result of continuousadverse reserve developments. In addition, Everest's enterpriserisk management program is adequate, but the implementation of amore robust ERM [enterprise risk management] program has beenslower than expected, S&P said.

S&P said the stable outlook reflects its view that Everestwill maintain its strong competitive position with a globalpresence.

During a fourth-quarter earnings conference call last month,Joseph Taranto, Everest's chief executive officer, addressed thepossibility of an S&P downgrade, saying he believed it wouldhave no meaningful impact on the reinsurer's business goingforward.

An "A-plus" is still a very good S&P rating, Mr. Tarantosaid, adding that the group's A.M. Best rating, referenced by mostU.S. customers, is at Best's "excellent" level of "A-plus" aswell.

"Our clients know us and our strength. We have been dealing withmany of them for 30-plus years," he added, noting that even thoughS&P imposed a CreditWatch in late December--during thereinsurance renewal season--"I did not hear from one underwriterthat it was factor in any of our deals."

In 2009, S&P said it expects Everest will produce a combinedratio in the 93-95 range.

The rating firm also commented that Everest has shifted itsbusiness mix toward property and international business in the pasttwo years, with reductions in U.S. casualty writings, adding thatthis strategy could make the company's operating results morevolatile.

This article was updated at 2:24 p.m.