London, 01 July 2011 -- Moody's Investors Services announced today that it
has downgraded to Baa1 from A2 the insurance financial strength rating of
Munich Reinsurance Co.-Life Reinsurance E.E.C.A. (MR Life E.E.C.A.), and
assigned a negative outlook. Moody's will also withdraw the rating for
its own business reasons.
Moody's Investors Service will withdraw the credit rating for its own
business reasons. Please refer to Moody's Investors Service's Withdrawal
Policy, which can be found on our website, www.moodys.com.
Moody's said the rating action follows the recent announcement that
Munich Re will return the licence for its subsidiary MR Life E.E.C.A. in
Moscow as a result of the restrained development of personal insurance.
Also, Munich said that the minimum capital requirement for Russian
reinsurers will quadruple as from 1 January 2012 to -16m, and that the
business therefore cannot operate at a profit in the medium term.
Moody's said that its rating action reflects the fact that MR Life
E.E.C.A. has now ceased writing new business as it looks to either
transfer its active obligations to its parent company, Munich Re, or
return them to the ceding companies. Negotiations with cedants have to be
finalised before this can be achieved, and it is possible that some
liabilities will remain with MR Life E.E.C.A. at the end of the year. In
this regard, Moody's recognises the provision of retrocession protection
by Munich Re to MR Life E.E.C.A. in the form of surplus treaties and a
multi-year stop loss. Also, with regard to Munich Re's stated commitment
to honour ongoing treaties, Moody's notes that the extent of liabilities
on the balance sheet of MR Life E.E.C.A. is very small in comparison to
the wider Munich Re Group.
The following rating has been downgraded and will be withdrawn:
Munich Reinsurance Co.-Life Reinsurance E.E.C.A.- IFSR to Baa1 from A2
and will be withdrawn.
Moody's last rating action on MR Life E.E.C.A. occurred on 13 October
2006 when a first-time IFSR of A2 was assigned to the company.
The principal methodology used in this rating was Moody's Global Rating
Methodology for Reinsurers published in July 2008.