S&P lowered its counterparty credit and financial strength ratings on Best Meridian Ins. Co. and its subsidiary, Best Meridian International Ins. Co. to “BB+” from “BBB-” and assigned a stable outlook.
At the same time, S&P withdrew the ratings, as the company will no longer provide the information necessary to maintain an interactive rating relationship.
According to S&P, the downgrade reflects the belief that BMI will fail to meet full-year 2004 expectations as set forth in the July 2004 release.
Through nine months in 2004, the company is well behind earnings targets that were agreed on with the company supporting S&P’s opinion that BMI will continue to have difficulties in accurately forecasting its underwriting results and providing a stable stream of earnings and capital growth.
The ratings are based on the group’s marginal capitalization and earnings, unpredictable financial results, and stagnant business growth. The negative factors are offset by a good understanding of the Latin American insurance market, conservative investment practices, relatively strong liquidity and notable improvements in financial leverage.
The two entities were rated together because Best Meridian International, domiciled in the Cayman Islands, is considered a core subsidiary of BMI.
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