The rating agency has downgraded the Swiss reinsurer from Aa3 to A1 as a result of the group’s “weakening profitability, capital adequacy, and financial flexibility metrics”, said a statement.
While Moody’s expects the group’s core reinsurance activities to continue to perform well, a statement says: “It sees the potential in the short-term for overall profitability to be suppressed by further mark-to-market losses”.
the statement says: “Moody’s also believes that, notwithstanding an excellent market position, the group’s business franchise may be weakened to an extent by its year-end 2008 results, although Swiss Re remains in a good position to take advantage of improved market conditions. The negative outlook is principally driven by the challenge of running off the group’s legacy portfolios.”
Swiss Re reported a net loss of £509m during 2008, with legacy unit markwd losses of £3.5bn.