Moody's Investors Service lowered the insurance financial strength rating of Montpelier Reinsurance Ltd. to "Baa1″ from "A3."
The New York-based rating service said the outlook is stable.
Moody's said the action follows the company's report of substantial losses from the recent hurricanes, representing 66 percent of shareholders equity as of June 30 and over two years' worth of net income.
The losses, the service added, were outside of its rating expectation and "raise concerns about the company's risk management."
Despite raising $600 million in the equity markets after Katrina, the loss estimates have continued to increase significantly and are further burdened with losses from Rita and Wilma.
Moody's said the company is expected to "re-evaluate its risk tolerance and reduce its underwriting exposures" in line with its capital levels.
For the third quarter, Montpelier reported a net loss of $875.1 million, or a loss of $12.16 per share. It said losses from the hurricanes would amount to $972 million.
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