Moody's Investors Service has placed the A1 Financial Strength rating and A- Good performance rating of Wellington Underwriting on review for possible downgrade.
Moody's said the move reflects concerns over risk management, with the syndicate's Hurricane Katrina loss being outside of Moody's expectations for a loss event of this magnitude.
Wellington announced a revised estimated net loss, including reinstatement premiums, from Hurricane Katrina of $330m, equivalent to approximately 25% of the syndicate's 2005 capacity prior to taking into account other earnings from the rest of the book.
Approximate losses from Hurricanes Rita and Wilma were respectively 5% and 7% of 2005 capacity. The total loss from the three hurricanes is estimated at 37% of capacity.
Moody's stated that the rating review will focus on the group's risk management procedures and the syndicate's business plan for 2006.
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