Standard & Poor's Ratings Services said today that it placed its 'AA-' counterparty credit and financialstrength ratings on Renaissance Reinsurance Ltd. on CreditWatch with negative implications.
At the same time, Standard & Poor's placed its 'A' counterparty credit and senior debt ratings and other ratings on RenaissanceRe Holdings Ltd.
on CreditWatch with negative implications.In addition, Standard & Poor's also placed its 'A' counterparty credit and financial strength ratings on DaVinci Reinsurance Ltd. on CreditWatch withnegative implications.
"The CreditWatch action reflects RNR's announcement that the company plans to restate financial statements and the uncertainties surrounding this event," explained Standard & Poor's credit analyst Damien Magarelli. "The restatements are related to the timing and recognition of premiums and recoverables–-this will affect financials statements from 2001 through 2004."
The potential effect to RNR's competitive position, including reputation risk and the ability to meet filing and regulatory requirements, remains unclear and supports the CreditWatch.
The ratings are based on very strong operating performance, robust cash flow, very strong financial flexibility, very strong competitive position, technical modeling skills, and a very strong and well-regarded anagement team. Management has expressed its firm commitment to maintain capital adequacy at the 'AA-' level, with a Standard & Poor's capital adequecy ratioof 160%.
Offsetting these strengths is uncertainty about the long-term performance of the specialty reinsurance and individual risk business, considerable exposure to high-frequency and high-severity events, and correlated risksbetween the operating company and some other holding company investments.
