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Moody’s downgrades Swiss Re

Moody’s Investors Service has downgraded the insurance financial strength and senior debt ratings of Swiss Re.

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.

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