Standard & Poor's (S&P) has revised its outlook on Luxembourg-based insurer Gaviota Re to negative from stable, but has affirmed the company's counterparty credit and insurer financial strength ratings at BBB-plus.
Ratings agency Standard & Poor's (S&P) has revised its outlook on Luxembourg-based insurer Gaviota Re to negative from stable, but has affirmed the company's counterparty credit and insurer financial strength ratings at BBB-plus.
S&P said the change in outlook for Gaviota Re's ratings was a direct consequence of the outlook revision, to negative from stable, on Repsol, Gaviota Re's Spanish parent.
The agency added that Gaviota Re was an integral part of Repsol's risk management strategy.
Repsol is an oil and gas company with exposure to the Argentinean economy.
S&P said the ongoing devaluation of the Argentine peso, the unpredictable results of Repsol's negotiations with the Argentine government, regarding prices for natural gas and oil products, and potential interruptions in the various supply chains had created growing risks that Repsol might not be able to reach its targeted credit measures.
It added that despite the outlook revision on Gaviota Re, it considered the company to be extremely well capitalized, with a risk-adjusted capital adequacy ratio in excess of 500% in 2000.
"Further stand-alone characteristics are Gaviota Re's very comprehensive reinsurance program, which provides robust protection against high severity losses, and the company's conservative, low-risk, and highly liquid investment portfolio," S&P said.
