BluePoint Re, Channel Re and RAM Re all on creditwatch negative, reveals S&P
Standard & Poor's has placed its “AA” rating on BluePoint Re, its “AAA” rating on Channel Reinsurance, and its “AAA” rating on RAM Reinsurance on CreditWatch with negative implications.
Ratings on the companies' related entities, as well as RAM Re's contingent capital facility, were also affected.
At the same time, Standard & Poor's affirmed its “AA” rating on Assured Guaranty Re, with a stable outlook.
The rating actions are the result of S&P’s most recent review of all the bond reinsurance companies' capital positions, our projections of their respective subprime-related losses, and the companies' plans for managing their capital positions.
The affirmation of Assured Guaranty Re’s rating reflects a substantial overage of the company's capital cushion (the amount of capital in excess of the minimum required in our view to demonstrate capital adequacy consistent with its current rating) relative to projected losses from subprime RMBS and ABS CDO exposure.
Assured Guaranty Re's strategy of limiting its subprime-related exposure has served it well.
The ratings on BluePoint Re and Channel Re were placed on creditwatch with negative implications.
These actions reflect that, for each company, S&P’s projected losses on subprime-related exposures exceed the company's capital cushion as of 31 December 2007.
The ratings on RAM Re, RAM Holdings and Blue Water Trust I (“A+”, a committed capital facility supported by, and for the benefit of, RAM Re) were placed on creditwatch with negative implications.
This action reflects S&P’s view of the shortfall of RAM Re's capital cushion at 31 December 2007, relative to projected subprime-related losses.
It also incorporates and elevates the importance of RAM Re demonstrating improved financial metrics, as first cited in July 2006, when S&P assigned negative outlooks to RAM Re and RAM Holdings.