Alea crippled by S&P downgrade; put up for sale
On the eve of the key Monte Carlo reinsurance Rendez-Vous event, Standard & Poor's has again downgraded a troubled reinsurer below its pivotal A- rating.
The London-listed reinsurer Alea Group confirmed this morning that was now "exploring strategic alternatives including the sale of the Group" following S&P's decision to downgrade the troubled reinsurer to BBB+ with a negative outlook.
Shares in the Kohlberg Kravis Roberts & Co backed reinsurer - which listed in 2003 at 250p - fell more than 5 percent in morning trading to 132.25p.
The decision echoes Standard & Poor's downgrade of Converium last year to BBB which forced the reinsurer to close its US operations and led to the eventual demise of chief executive Dirk Lohmann.
The reinsurer said it would now review its plans - announced last week - to raise up to $210mn in equity capital which was designed to stave off a ratings downgrade from either S&P or AM Best.
At the end of August, Alea disappointed investors with a $34.7mn increase in reserves which saw profits fall to $25.9mn against $48.8mn. The company has been facing a downgrade since June when AM Best placed the company's financial strength rating of A- (Excellent) and its issuer credit rating of a- under review with negative implications on concerns over capital adequacy.
Published on September 9, 2005
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