Ratings Roundup: DBV-Winterthur, Sul America, PXRE, Electro Re

Standard & Poor’s Ratings Services has assigned its ‘AA’ counterparty credit and insurer financial strength rating to German insurers DBV-Winterthur Lebensversicherung AG, DBV-Winterthur Krankenversicherung AG, DBV-Winterthur Versicherung AG, and DBV Deutsche Beamten-Versicherung AG with stable outlooks. “The ratings reflect our view that the DBV companies (DBV) are core to the AXA group (core operating entities rated AA/Stable/–), a leading international insurance group,” said S&P. “We assigned core status based on the DBV entities’ full strategic and operational integration with AXA’s existing core operating entities in Germany,” explained S&P credit analyst Johannes Bender. S&P stated: “We believe DBV enhances AXA’s competitive position in Germany because of its strong foothold in the civil servant segment, its large tied-agent and broker network, and cooperation with trade unions and associations with a close link to the public sector. In addition, AXA’s acquisition of DBV increased its market share in Germany in all major lines of business. With gross premiums written of about €9.8 billion [$13.97 Billion] in 2007, the combined group ranks among the top five in the German market.”

Standard & Poor’s Ratings Services has raised its long-term counterparty credit and senior unsecured debt ratings on Brazil-based insurance holding company Sul América S.A. (SASA) to ‘B+’ from ‘B’. S&P also raised the counterparty credit rating on SASA’s main operating insurance entity, Sul América Companhia Nacional de Seguros, to ‘BB’ from ‘BB-‘. The outlook on both entities is positive. “The rating action is based on the holding company’s significantly reduced leverage and strongly enhanced capitalization after its IPO,” explained S&P credit analyst Milena Zaniboni.

A.M. Best Co. has affirmed the financial strength rating (FSR) of ‘B+’ (Good) and issuer credit rating (ICR) of “bbb-” of PXRE Reinsurance Company of Hartford, Conn. with a stable outlook. Best subsequently withdrew both ratings and assigned a category NR-3 (Rating Procedure Inapplicable) to PXRE as the company has effectively been in run off since fourth quarter 2006.”

A.M. Best Co. has downgraded the financial strength rating (FSR) to ‘B+’ (Good) from ‘B++’ (Good) and issuer credit rating (ICR) to “bbb-” from “bbb” of Electro Re S.A. (Luxembourg), the reinsurance subsidiary of Alcatel-Lucent (France), a leading telecommunication equipment manufacturer. The outlook on both ratings remains negative. “The downgrade and the negative outlook reflect the uncertainty about Electro Re’s reallocation of reserves from equalization reserves in the next two years which are likely to negatively impact prospective earnings, under Luxembourg GAAP,” Best explained. “Furthermore, the ratings reflect Alcatel-Lucent’s difficulties in executing the merger that started at the end of 2006.”