S&P Lowers Sirius Ratings to ‘A’, Off CreditWatch

February 28, 2002

Standard & Poor’s announced that it has lowered its long-term ratings on Sweden-based Sirius International Insurance Corp. (Sirius) to single-‘A’ from single-‘A’-plus “as a result of a weakening in the company’s business position.” It also removed Sirius from CreditWatch, where they were placed on Feb. 14, and said the outlook is stable.

Sirius is the parent company of Scandinavian Re, which was recently downgraded by S&P, and has since announced it will stop writing new business (See IJ Website February 15 and 20). Its controlled by the global electrical engineering giant ABB, and losses at Scan Re, as well as in other areas have in S&P’s opinion “weakened its business position.”

While its concern is principally what effect the runoff at Scan Re will have on Sirius, the rating agency is also uncertain as to the group’s exposure to the events of Sept. 11. Presumably the concern stems from ABB’s status as one of the world’s biggest engineering firms, although S&P didn’t mention this aspect in its review.

Summarizing its decision S&P stated that it now views Scandinavian Re as nonstrategic to its parent (following Scandinavian Re’s earlier decision not to write new business or renew existing contracts), but that Sirius remains committed “to ensuring that the liabilities of Scandinavian Re are met in full.” Dr.

Dr. Earl Lancaster, a director at S&P’s Insurance Ratings Group, concluded that, “Prospectively, Standard & Poor’s views Sirius to have extremely strong capital, a strong operating performance, and a good, although less diversified, business position.”

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