S&P Revises Congregational & General Outlook on Capital Woes

Standard & Poor’s Ratings Services has revised its outlook on U.K.-based P/C insurer Congregational & General Insurance PLC to negative from stable, “due to a swift and significant deterioration in its capital adequacy as a result of heavy operating losses in the financial year to date.”

However, S&P affirmed its ‘BBB-’ long-term counterparty credit and insurer financial strengths ratings on the company.

“The ratings reflect Congregational & General’s robust competitive position within its core, but very small, niche commercial property market; and its good, but very volatile, capital adequacy,” said S&P. These factors are somewhat offset by the Company’s marginal competitive position and recent marginal operating performance within the personal property market.

“The negative outlook reflects our view that Congregational & General’s operating performance and capital adequacy have been considerably weakened by adverse weather losses in the past seven months,” stated S&P credit analyst Nigel Bond.

S&P said it “expects, however, that remedial underwriting and capital action and a return to more normal loss patterns will result in operating performance and capital adequacy improving significantly in 2009, which may lead to a restoration of the stable outlook.”

However, S&P concluded that “continued losses will put further pressure on Congregational & General’s capital adequacy, and bring into question the logic of the company’s strategy, which may lead to the ratings being lowered.”

Source: S&P