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AM Best: Aspen, Quanta under review

Ratings agency AM Best has placed the financial strength rating of “A-” (Excellent) and issuer credit rating of “a-” of Bermudian reinsurer Aspen Insurance Limited under review with negative implications.

The news follows Aspen’s announcement on 3 September that its net loss from Hurricane Katrina would range between $325-400mn, a significant increase in the $150mn advised earlier in the month.

The ratings agency said the new estimate meant Aspen would suffer “a significant diminution in its risk-adjusted capitalisation” as a result of the hurricane.

It added: “There remains a risk that the company will be unable to re-establish its capitalisation at a level commensurate with its current ‘A-’ (Excellent) rating.”

It said the company’s ratings would remain under review until there was a full assessment of the impact of recent catastrophes on the company.

Shares in Aspen are currently trading at $23.47 a share, well down from a one week high ahead of the revised Katrina estimate of close to $30 a share.

Separately, AM Best announced this morning that it had placed the financial strength rating of “A-” (Excellent) and issuer credit rating of “a-” of Bermudian reinsurer Quanta under review.

AM Best’s action followed a statement from Quanta that it was looking at retained net losses from hurricanes Katrina and Rita of $40-50mn and $2-8mn, respectively.

In a statement the company said the estimate took into account the receipt of anticipated recoverable amounts under reinsurance and retrocessional agreements and the effects of reinstatement premiums.

It added that the losses were attributable to its property reinsurance, technical risk property insurance and marine, technical risk and aviation reinsurance business lines.

Meanwhile, the Property Claim Services unit of the Insurance Services Office has released its estimate of insured losses incurred as a result of Hurricane Katrina at approximately $34.4bn, making it the most expensive catastrophe ever for US property/casualty insurance industry.

It added that flooding and wind damage caused by the hurricane was expected to lead to more than 1.6 million claims from policyholders in the states of Alabama, Florida, Georgia, Louisiana, Mississippi and Tennessee.

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