Shares in Alea Group Holdings (Bermuda) Ltd slumped after the specialty insurer and reinsurer warned that it may have to raise extra capital to ward off a downgrade in its credit ratings.
Alea said AM Best, the leading insurance sector rating agency in the US, had told it that it would have to 'significantly' increase its capital in order to maintain its ratings, which currently stand at 'A-' for financial strength, and 'a-' for issuer credit.
'Alea is considering the most appropriate and expedient method for addressing AM Best's concerns and to maintaining its ratings, which would include raising additional capital, the exact form of which we will begin discussing with our financial advisors,' chief executive Mark L Ricciardelli said.
An Alea spokesman said the company was still in talks with AM Best, and that there was as yet no precise indication of how much extra capital it might have to raise.
Alea shares were down 13.5 pct at 160 pence at 12.35 pm as investors digested the news. A ratings downgrade means that a company carries a higher credit risk, making it more expensive for it to borrow money.
