Two days after Standard & Poor’s lowered its ratings on Munich Re (See IJ Website August 28), and previous article), A.M. Best Co. announced that it has downgraded the group’s financial strength ratings to A+ (Superior) from A++ (Superior). Debt ratings and Best’s ratings of Munich Re’s subsidiaries were also affected, while the group’s outlook was changed to stable from negative.
These rating actions follow Munich Re’s release of earnings for the first six months of 2003,” said Best “Munich Re has reported an improvement of its non-life underwriting performance, but A.M. Best believes that earnings for the full year 2003 will be below expectations. Munich Re has reported a half year loss of EUR 603 million (USD 663 million) after a EUR 1.4 billion (USD 1.54 billion) tax provision.”
Best added, however, “Munich Re still holds a superior business position as the world’s largest reinsurer benefiting from its outstanding global network and underwriting capacity.” Best also issued a companion announcement that the downgrade in Munich Re’s ratings could have an affect on American Re (see following article).
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