Fitch Ratings has downgraded two ratings for the Munich Reinsurance Company (Munich Re).
The financial strength rating and long-term rating were both downgraded from AA+ to AA. Fitch said the outlook remained negative.
At the same time the ratings of some Munich Re bond issues and debt instruments of its subsidiary, Ergo, were downgraded to AA- from AA. These ratings actions affect roughly €5.3bn of debt.
The actions followed a detailed and ongoing review of historic and prospective earnings as well as profitability trends in the 2003 results to date, said Fitch.
The ratings agency said it believed that the group earnings were currently substantially below what would be expected of an AA+ level insurer, and that it remained exposed to weakness in primary life segment earnings, potential further reserve strengthening, as well as goodwill amortisation unless the group's targets were met.
Offsetting factors were an excellent market position, a very strong capital position and a profitable outlook for the group's reinsurance segment.
