AM Best Downgrades Credit Ratings Of 777 Re
AM Best has downgraded the Financial Strength Rating of 777 Re. Ltd., citing concerns over the company’s “marginal operating performance, very limited business profile and weak enterprise risk management.”
The ratings agency said, “AM Best has downgraded the Financial Strength Rating to C- [Weak] from B [Fair] and the Long-Term Issuer Credit Rating to “ccc-” [Weak] from “bb” [Fair] of 777 Re. Ltd. [Hamilton, Bermuda]. Concurrently, AM Best has maintained the under review with negative implications status for these Credit Ratings [ratings].
“The ratings reflect 777 Re. Ltd.’s balance sheet strength, which AM Best assesses as very weak, as well as its marginal operating performance, very limited business profile and weak enterprise risk management.
“The rating action reflects a revision in 777 Re. Ltd.’s balance sheet strength assessment to very weak, due to a significant exposure to less liquid affiliated investments. Additionally, AM Best’s view of the company’s operating performance and business profile were adjusted downward reflecting its diminished ability to write new business while simultaneously planning to address existing liabilities.
“The company is working with the Bermuda Monetary Authority to reduce its exposure to affiliated assets, which is the primary driver of the material decline in its risk-adjusted capitalization. Finally, the company’s risk management controls have shown some weakness, including the significant year-over-year increase in affiliated assets, which the company needs to address in the near term. The ratings will remain under review with negative implications until the company successfully executes on its plan to reposition its asset portfolio and bring its risk management practices in line with AM Best’s expectations.”
