Takeover target Swiss reinsurer Converium has had its financial strength rating raised to "A-minus" from "triple-B-plus," Standard & Poor's said.
S&P credit analyst Simon Marshall noted that the move is reminiscent of the similar upgrade of SCOR in 2005.
For any reinsurer to fall below the "A" rating tier can be traumatizing. "In the past it has proved challenging for reinsurers' financial strength to bounce back once their ratings fall below 'A-minus,'" Mr. Marshall wrote.
Nonetheless, the success of both Converium and SCOR demonstrates what a loyal client base, supportive capital markets and a credible turnaround plan from management can accomplish, S&P said.
Today, Converium is being targeted by SCOR in an unsolicited takeover bid. "Whether or not the bid is successful, the attempt illustrates again the vulnerability of companies to the attentions of predators once management turnarounds have been completed," Mr. Marshall said.
The fact that the SCOR bid has not attracted competing offers, Mr. Marshall noted, is an indication of the internal focus today of potential suitors and the poor track record of reinsurer takeovers.
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