Moody’s Investors Service announced that has downgraded Munich Re’s insurance financial strength rating from the highest possible ‘Aaa’ to its next highest category ‘Aa1’ due to the ongoing erosion of values in the capital markets.
The rating agency stressed that the company’s financial position, as the world’s largest reinsurer, was still very strong, but added that it didn’t believe “that Munich Re’s internal capital generation going forward will be sufficient to restore its capital to its former exceptional level.”
It also downgraded its insurance financial strength rating on Munich’s U.S. subsidiary American Re to ‘Aa2′ and its senior debt rating to’Aa3’.
Moody’s decision comes 10 days after Standard & Poor’s announced that it had reaffirmed the company’s ‘AAA’ rating. While Munich Re so far has had no comment on Moody’s actions, it did highlight the S&P decisioin on its website, along with a statement from Dr. Jörg Schneider of its Board of Management who saw the affirmation of the top rating as further strengthening its position in the forthcoming renewal of many reinsurance treaties. “Naturally, we are pleased at such recognition, not least in view of the current weakness of the capital market and the volatility of the stock exchanges,” Schneider stated. “Our clients will regard this as a confirmation of their choice of reinsurer. Given that the reinsurance cover we offer has again been awarded top-security rating, it will therefore bolster our efforts to achieve risk-adequate conditions and prices.”
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