A.M. Best downgraded Swiss Re's insurance financial strength, saying it did not believe the company has enough risk capital to withstand another catastrophic loss.
The Oldwick, N.J.-based insurer downgraded the financial strength rating to “A (Excellent)” from “A-plus (Superior).” It also downgraded the issuer credit ratings to “a-plus” from “double-a-minus.” All ratings were removed from under review with negative implications and assigned a stable outlook.
“Swiss Re's overall risk-adjusted capitalization does not have sufficient cushion to weather more negative effects of the continue turmoil in the financial markets and other unexpected events,” Best said in a statement late on Friday.
Despite the capital raise and reinsurance purchases the company has made, Best said the Switzerland-based carrier is exposed to further volatility and mark-to-market adjustments from credit swaps and securitized products. Best noted that Swiss Re has taken action to reduce these and other financial risk exposures.
The rating agency said it will continue to monitor the company's competitive position, “which is key to its future earnings capability and strong financial flexibility.”
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