Reinsurance industry rating unaffected

Bermuda’s reinsurance industry financial strength ratings are unaffected by the downgrading of the island’s credit rating from stable to negative, according to financial analysts Standard & Poors.

A report on the island said: “Despite the recent outlook revision of the sovereign credit rating on Bermuda to negative from stable, our counterparty credit and financial strength ratings on Bermuda Bermuda-based (re)insurance companies remain unchanged.”

Standard & Poors rates a total of seven insurance and reinsurance companies on the island in the AA category.

Taoufik Gharib, a credit analyst at the firm, said: “Reinsurers that we may rate above the sovereign write most of their business with policyholders outside the financial centre, hold most of their investments in a form other than local sovereign debt of that financial centre and hold most of their deposits and invested assets in financial centres domiciled outside that financial centre.”

The report, highlighted in the Insurance Journal, added: “We believe such (re)insurers’ financial strength is independent of the financial centre’s sovereign risk.”

Standard & Poors also said that the island’s insurers and reinsurers showed “financial resilience” in 2012, “despite catastrophe losses, decreasing investment income, increasingly competitive pricing, a tepid economic recovery in the US and the Euro zone crisis.”