Alea group downgraded, S&P’s

Standard & Poor’s Corp. has downgraded its long-term counterparty credit and insurer financial strength ratings on the Alea Group (Alea) to ‘BBB’ from ‘BBB+’ in response to Alea’s recent announcement that Alea London Ltd. has ceased to write business and that it will sell its renewal rights for part of Alea London’s program to Canopius Holding U.K. Ltd. Alea says it is exploring “options for the remaining parts of the group.”The operating entities that constitute Alea group include: Alea North America Insurance Co.; Alea North America Specialty Insurance Co.; Alea Europe AG; Alea (Bermuda) Ltd.; Alea Global Risk Ltd.; Alea Jersey Ltd.; and, Alea London Ltd. Alea says that S&P’s downgrade will “impair Alea Europe Ltd.’s ability to underwrite business.””As a result of recent management actions, only Alea Europe AG continues to underwrite new business, and we consider that the Alea group as a whole is close to being in effective run-off,” S&P’s credit analyst Simon Marshall says. As measured by 2004 net premiums written, 83% of the Alea group’s business is now in run-off. S&P’s however says Alea group’s capitalization is strong and as such Alea should be able to honor those insurance and reinsurance undertakings that remain outstanding to be secure. Alea’s management has not sought regulatory approval regarding withdrawal of capital from its operating companies at this time and the existing cross-guarantees between the group’s operating entities are expected to remain in place.