Aviva Bermuda Re On S&P Credit Watch
Standard & Poor’s Ratings Services today assigned a rating of ‘AA-’ to Aviva Re Ltd. — also known as Aviva Re Bermuda — and placed it on credit watch with negative implications.
S&P analysts said the Aviva Group has made changes to its legal structure and reviewed its internal reinsurance strategy in light of the anticipated effect on group diversification benefits and capital management of Solvency II, the upcoming European Union directive on the supervision of insurance and reinsurance companies.
“As a result, the group has decided to transfer internal reinsurance activity, in particular that for its European life business, from Aviva Re Europe to other group entities, including Aviva Re Bermuda,” said S&P. “From December 31, 2011, the reinsurance contracts currently within Aviva Re Europe will either be transferred to Aviva Re Bermuda or be recaptured by the ceding internal companies.
“We therefore withdrew the rating on Aviva Re Europe and are assigning a new rating to Aviva Re Bermuda,” said Best. “We consider Aviva Re Bermuda to be ‘core’ under our group rating methodology. Aviva Re Bermuda will become a more important part of the group and, in particular, we view it as integral to the group’s overall internal reinsurance strategy.
“In line with all core operating entities of Aviva Group, Aviva Re Bermuda has been placed on credit watch with negative implications.”
