S&P Places Reinsurer ESG on Watch Negative

May 15, 2000

Standard & Poor’s CreditWatch announced that it had placed the counterparty credit and insurer financial strength ratings of European Specialty Reinsurance Group (ESG Re Ltd.) on credit watch with negative implications.

The core companies affected are European Specialty Reinsurance (Bermuda), Ltd., European Specialty Reinsurance (Ireland), Ltd. and European Specialty Reinsurance Ruckversicherung AG.

S&P lowered ESG’s BBB rating in March to BB+, and the present announcement reveals further weakness at the company following poor 1st quarter results with a reported loss of $10.2 million. Despite the 3rd consecutive losing quarter, ESG has not lowered dividend payments to shareholders, and has authorized a further repurchase of its shares, putting greater pressure on capitalization.

“ESG’s ratings reflect its weak earnings performance, reduced capitalization, concerns over internal control mechanisms, and the company’s early departure from its original business development strategy,” said the announcement.

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