Standard & Poor's has revealed it has lowered its counterparty credit and insurer financial strength ratings, on German reinsurer Munich Re to "AA-" from "AA+".
The ratings agency said it had lowered the reinsurer's ratings on the basis that its capital base has weakened.
A Standard & Poor's statement also claimed that Munich Re's ability to meet an expected combined ratio of 104% was "questionable".
A statement said: "Standard & Poor's therefore considers it likely that it will take the group longer than expected to bring profitability back to a very strong level--particularly if the currently challenging operating and financial environment persists--thereby also delaying the group's progress in rebuilding its capital base."
Standard & Poor's credit analyst Wolfgang Rief said: "The rating actions follow Munich Re's preliminary 2002 earnings release on March 27, 2003, and reflect the group's disappointing overall earnings performance for 2002, on the back of a poor 2001 and a slower-than-expected earnings recovery, and despite underlying improvements in its reinsurance business for 2002."
