Alea reports 2005 losses

Storm losses and US claims has lead Bermuda-based reinsurer Alea Group Holdings Ltd. to estimate a 2005 after-tax loss of between $200 and $240 million (between $1.15 and $1.38 a share), which may ultimately cause the reinsurer to close to new business and call a breach of agreement with its lenders.
With shares in its corporation falling by 23% Alea continues to face many uncertainties.
Still in the process of completing an analysis of asbestos and environmental reserves, the company has reported it may take a charge of around $95 million in 2005.
A.M. Best Co. recently downgraded Alea’s financial strength rating to B (Fair) from B++ (Very Good) and the issuer credit rating to “bb” from “bbb” of the insurance and reinsurance operating subsidiaries of Alea Group Holdings.
The rating applies to Alea London Limited, Alea (Bermuda) Limited, Alea Europe Limited, Alea North America Insurance Company, Alea North America Specialty Insurance Company, Alea Global Risk Limited and Alea Jersey Limited.
A.M. Best reports that “the outlook for all ratings remains negative” and as such the ratings agency has withdrawn all ratings and has assigned an NR-4 (Company Request) to the Alea Group companies.
A.M. Best reports that it expects Alea will continue to be affected by high expenses related to the transition of Alea group into run off and the continuing potential for adverse reserve development.
Alea’s credit ratings was cut in September 2005 by A.M. Best and after this downgrade, the reinsurer cut jobs, closed to new clients and boosted reserves for US business that was previously written.