Ratings agency AM Best has downgraded the financial strength ratings of Munich Re and its core subsidiaries to A+ (Superior) from A++ (Superior), on expectations that full-year earnings for the reinsurer will be below expectations.
The decision follows Munich Re's release of earnings for the first six months of 2003. The group reported a half year loss of €603m after a €1.4bn tax provision.
AM Best said that although the group registered an improved non-life underwriting performance, it believed earnings for the full year 2003 would fall short of expectations.
AM Best has also downgraded Munich Re's €1.15bn 1.0% senior unsecured convertible Eurobonds, due June 2005, to `aa' from 'aa+' and the €3bn 6.75% subordinated Eurobonds, due June 2023, issued by Munich Re Finance BV and guaranteed by Munich Re, to 'a+' from 'aa'.
The outlook on all ratings has been changed to stable from negative.
Munich Re remained the world's largest reinsurer, benefiting from its outstanding global network and underwriting capacity, AM Best said.
