Moody's Investors Service has downgraded the insurance financial strength rating of Munich Reinsurance Company from Aaa to Aa1.
Moody's has also downgraded the insurance financial strength rating of its US subsidiary, American Re Corporation, to Aa2 and its senior debt rating to
Aa3. The rating outlook for all the ratings is stable.
Moody's said that the ratings of Munich Re and American Re (AR) were placed on review for downgrade on 23 July 2002 following Munich Re's announcement on July 10 that it would be increasing reserves at AR by $2bn, raising its IBNR provisions for the WTC loss by $500mn, and recapitalising AR.
Moody's stated that Munich Re remains very well capitalised, maintains a conservative reserving profile, has low levels of financial leverage and very good levels of fixed charge coverage.
As one of the largest and most highly rated global reinsurers, Munich Re is benefitting significantly from the industry's current rate hardening environment.
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