Standard & Poor’s takes Transatlantic Re off CreditWatch

Standard & Poor’s Ratings Services has taken Transatlantic Reinsurance Co. and its wholly-owned subsidiaries, Putnam Reinsurance Company and Trans ReZurich, off CreditWatch with negative implications and downgraded the company’s rating from an ‘AA’ to an ‘AA-‘.Standard & Poor’s said the outlook for these companies is stable.”We lowered the ratings because Transatlantic’s recent operating performance, albeit better than that of the global reinsurance market as a whole, was not consistent with the previous rating,” explained Standard & Poor’s credit analyst Laline Carvalho. “In addition, although the group enjoys a very strong franchise and diversified platform, it is not sufficiently differentiated from other ‘AA-‘ peers and has not produced better operating results than this peer group in recent years. “Similar to other global reinsurers, Transatlantic’s operating results over the last five years have been affected by significant volatility related to large catastrophe losses and moderate loss reserve development related to business written in the late ’90s.”S&P’s said the current ratings on Transatlantic Re “reflect its very strong business franchise, strong underwriting culture, conservative investment strategy, and excellent financial flexibility. These strengths are partially offset by lower-than-expected operating performance, declining capital adequacy, and a relatively volatile business profile given its opportunistic business strategy.”Standard & Poor’s said it expects Transatlantic Re will have a slight pretax loss the end of 2005, largely because of about $100 million in pretax losses related to Hurricane Wilma in the fourth quarter of 2005. “Assuming normal catastrophe losses, operating performance is expected to improve substantially in 2006 because of better market conditions,” says the ratings agency. “Capital adequacy is expected to improve to the strong range at year-end 2005 and into 2006.”