Moody’s downgrades Swiss Re from Aa3 to A1

Moody’s Investors Service has downgraded the insurance financial strength (IFSR) and senior debt ratings of Swiss Reinsurance Company (Swiss Re) and associated companies from Aa3 to A1.
The ratings have been assigned a negative outlook, according to Moody’s.
The downgrade concludes the review for possible downgrade that was initiated on Feb. 6, 2009. Short-term ratings of Prime-1 were affirmed, Moody’s noted.
The downgrade was prompted by Swiss Re’s weakening profitability, capital adequacy, and financial flexibility metrics, the agency notes.
“Going forward, Moody’s expects the group’s core reinsurance activities to continue to perform well, but sees the potential in the short-term for overall profitability to be suppressed by further mark-to-market losses,” a release says. “Moody’s also believes that, notwithstanding an excellent market position, the group’s business franchise may be weakened to an extent by its year-end 2008 results, although Swiss Re remains in a good position to take advantage of improved market conditions. The negative outlook is principally driven by the challenge of running off the Group’s legacy portfolios.”