A.M. Best Downgrades and Affirms Ratings of Electro Re S.A.OLDWICK, N.J. -- A.M. Best Co. has downgraded the issuer credit rating (ICR (Intelligent Character Recognition or Image Character Recognition) The machine recognition of hand-printed characters as well as machine printing that is difficult to recognize. ) to "bbb" from "bbb+" and affirmed the financial strength rating (FSR (Free System Resource) In Windows 3.x, the amount of unused memory in various 64K blocks reserved for managing current applications. Every open window takes some space in this area. See Windows memory limitation. ) of B++ (good) of Electro Re S.A. (Luxembourg), the reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. subsidiary of Alcatel-Lucent (France). The outlook on both ratings has been changed to negative from stable. The rating actions reflect the ongoing reserving changes which are significantly impacting the company's risk-adjusted capitalisation and earnings. The negative outlook reflects Alcatel's weaker financial situation following the merger with Lucent Technologies at the end of 2006. In A.M. Best's view, Electro Re's risk-adjusted capitalisation has significantly deteriorated as a result of a reallocation of IBNR IBNR Incurred But Not Reported IBNR Interesting But Not Relevant reserves previously included as part of the equalisation reserves, which A.M. Best regards as equity, and reserve strengthening actions, which were partially mitigated by high unrealised investment gains (EUR EUR In currencies, this is the abbreviation for the Euro. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 35 million [USD USD In currencies, this is the abbreviation for the U.S. Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 47 million]) in 2006. In A.M. Best's opinion, both risk-adjusted capitalisation and earnings (Electro Re experienced a EUR 20.7 million [USD 28 million] pre-tax loss before allocation to equalisation reserve in 2006) are expected to remain volatile in the next two years due to the change in reserving methodology. However, A.M. Best notes that under International Financial Reporting Standards International Financial Reporting Standards (IFRS) are standards and interpretations adopted by the International Accounting Standards Board (IASB). Many of the standards forming part of IFRS are known by the older name of International Accounting Standards (IAS). , these actions are earnings neutral. The negative outlook reflects A.M. Best's opinion that Alcatel's weaker financial situation following the merger with Lucent Technologies could negatively impact Electro Re's business profile. For Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings. Founded in 1899, A.M. Best Company is a full-service credit rating organization dedicated to serving the financial services industries, including the banking and insurance sectors. For more information, visit www.ambest.com. |
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