IPC Re Loses A-Plus Rating From S&P

Standard & Poor's today became the fourth major rating agency to lower its ratings for Bermuda-based IPCRe Ltd. in recent weeks, dropping the financial strength rating to "A" from "A-plus" in the wake of recent storms.

Prior rating actions by other agencies included a cut to "A" from "A-plus" by A.M. Best, a cut to "triple-B" from "A-minus" by Fitch, and a cut to Baa1 from A3 by Moody's.

S&P also removed from CreditWatch and affirmed its "triple-B-plus" counterparty credit rating on IPC Holding Ltd.

The ratings outlook is negative.

S&P said that the ratings actions reflect that the catastrophes in 2005 created sizable losses for IPCRe, and due to IPCRe's concentrated profile in property catastrophe, its earnings volatility is higher than what was previously incorporated into the ratings.

In a statement announcing the action, credit analyst Jieqiu Fan said, "With uncertainty regarding the long-term performance of the property-catastrophe business and possible exposures to higher frequency and higher severity events, IPCRe could face additional challenges as a monoline property-catastrophe company in terms of pricing adequacy and risk management."

Still, on a more positive note, S&P said the ratings on IPCRe reflect the company's strong competitive position, its historically very strong (but volatile) operating performance, strong and stable management team, and strong capitalization.

S&P noted that it would consider revising the outlook to stable, if IPCRe's efforts to enhance its risk management and modeling capabilities enable it to meet capital and earnings expectations and achieve appropriate long-term returns.