Standard & Poor's downgraded Volkswagen's captive insurer Volkswagen Insurance Co (VICO) following the same action on its parent, the vehicle group.
The rating agency said the action did not reflect any changes to the characteristics of VICO in isolation from the larger group.
It cut Dublin-based VICO's insurer financial strength rating to A from A+ and described the outlook as stable.
Long term ratings on the Volkswagen group were subject to the same changes.
S&P credit analyst Paul Oates said: "As VICO is rated at the same level as the parent of the group, any rating action on VW requires identical action on VICO."
The downgrades were prompted by S&P's belief that VW will be unable to return to the profitability levels of the past few years in the foreseeable future.
