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Member, Beacon International Group, Ltd.
HAMILTON, Bermuda--Scandinavian Reinsurance Co. Ltd., a Bermuda-based finite risk reinsurer, has ceased new and renewal underwriting after contributing to parent company Sirius International Insurance Corp.'s $138 million loss for 2001.
Rating agencies Standard & Poor's Corp. and A.M. Best Co. cut their ratings of Scandinavian Re after the announcement to BBB- and B++, respectively, while placing their A+ ratings of Sirius under review with negative implications.
Both rating agencies cited deteriorating results and uncertainty about ultimate parent ABB Ltd.'s long-term commitment to insurers. ABB, a Zurich, Switzerland-based energy and manufacturing giant, is reviewing the strategic fit of all its businesses, Best noted.
ABB this week reported a $691 million net loss for 2001 after absorbing a variety of losses and charges. Among these were the $138 million loss from insurance operations--including $48 million stemming from the Sept. 11 terrorist attacks--and a $295 million noncash charge related to Scandinavian Re's no longer holding certain reinsurance reserves on a discounted basis.
ABB also took a $470 million aftertax charge to increase reserves for asbestos claims against its Combustion Engineering unit. The number of new claims against Combustion Engineering rose to 55,000 last year from 39,000 in 2000, while the average payment rose to $6,079 from $4,833, ABB reported. Total asbestos provisions on ABB's balance sheet rose to $940 million at year-end 2001 from $590 million at the end of 2000.