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NEW YORK—Standard & Poor’s Corp. has downgraded its counterparty credit and financial strength rating on Platinum Underwriters Holdings Ltd.’s core operating companies to “A-“ from “A” following the reinsurer’s estimate that it will have $112.4 million in third-quarter catastrophe losses.
Aside from the New York-based rating agency’s action on Platinum Underwriters Reinsurance Inc. and Platinum Underwriters Bermuda Ltd., S&P also lowered its counterparty credit rating Platinum Underwriters Holdings Ltd. to “BBB” from “BBB+.”
“The one-notch downgrade reflects the significant deterioration of Platinum's operating results,” Credit Analyst Jason Porter said Wednesday in a statement.
Unfavorable development
S&P noted that $88.2 million of the losses Platinum announced on Tuesday resulted from unfavorable development on the March 11 Japan earthquake and two earthquakes that hit New Zealand in February and June. Platinum's year-to-date catastrophe losses now stand at $439 million, or about 20% of year-end 2010 total capital, and the company’s results are a negative outlier relative to peers', S&P said.
“We believe that the sizable catastrophe losses indicate weakness in Platinum's ability to manage catastrophe risk,” S&P said in its statement.
S&P gave Platinum’s ratings a stable outlook, citing the expectation that the company will maintain its underwriting discipline and strong capital despite competitive market conditions.
A Platinum spokeswoman could not be immediately reached for comment.
The U.S. property/casualty insurance industry’s net income fell 67% to $6.9 billion during the first six months of this year compared with the same period a year earlier, according to a report to be released by A.M. Best Co. on Monday.