Standard & Poor’s Ratings Services announced that it has lowered its counterparty credit and financial strength ratings on Best Meridian Insurance Co. (BMI) and its subsidiary, Best Meridian International Insurance Co. (collectively referred to as the group) to “BB+” from “BBB-” and assigned a stable outlook.
At the same time, S&P said it has withdrawn the ratings, “as the company will no longer provide the information necessary to maintain an interactive rating relationship.”
“The downgrade reflects our belief that BMI will fail to meet full-year 2004 expectations as set forth in the July 7, 2004, release,” explained S&P credit analyst Tom Taillon. “Through nine months in 2004, the company is well behind earnings targets that were agreed on with the company.”
S&P said this also supports its opinion that BMI “will continue to have difficulties in accurately forecasting its underwriting results and providing a stable stream of earnings and capital growth. The ratings are based on the group’s marginal capitalization and earnings, unpredictable financial results, and stagnant business growth.”
However the rating agency noted that “these negative factors are offset by a better-than-average understanding of the Latin American insurance market, conservative investments, relatively strong liquidity, and improvements in the holding company’s financial leverage.
“These two entities were rated together because Best Meridian International, which is domiciled in the Cayman Islands, is considered a core subsidiary of BMI,” the report concluded.
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