Munich Re has branded its downgrade from ratings agency Standard & Poor's as unjustified, claiming the reasons given by the agency were insufficient to warrant the decision.
S&P downgraded Munich Re's insurance financial strength and long term counterparty credit rating from AA- to A+ (strong) after the German reinsurer reported a bottom line loss for the first half of 2003.
Munich Re cited a number of reasons as to why the downgrade was unwarranted: the 50% rise in equity funds in the second quarter of 2003 to over €18bn; the global diversification of Munich Re's reinsurance portfolio; and significant consolidation which has resulted in a reduction in the reinsurance combined ratio to 95.9% and the insurance ratio to 96%, in the first half.
Other factors which it said outweighed the decision to downgrade included the major changes made to the management team and the business focus in 2002. These had resulted in a profit since the beginning of this year, Munich Re said.
Dr Hans-Jürgen Schinzler said: "All in all, Munich Re is a group that is virtually unparalleled among international financial service providers with regard to quality, experience, global structure and networking.
"Clients, investors as well as applicants on the job market underline this point every day through their strong demand. It is regrettable that the standard model agency Standard & Poor's obviously fails to take account of the strengths of Munich Re.
"We will be continuing our discussions with the rating agency regarding this point."
