Standard & Poor’s Ratings Services today lowered its long-term counterparty credit and insurer financial strength ratings on Ireland-based Transamerica International Reinsurance Ireland Ltd. (TIRI) to ‘A’ from ‘AA-‘. At the same time the short-term counterparty credit rating was lowered to ‘A-1’ from ‘A-1+’. The ratings remain on CreditWatch with negative implications where they were placed on April 27, 2011, following the announcement that AEGON N.V. (AEGON, A-/Negative/A-2) had entered into an agreement with SCOR SE (SCOR, A/Positive/A-1) to sell its life reinsurance business, including TIRI.
The rating action follows the announcement on Aug. 10, 2011, that SCOR has completed the acquisition of AEGON’s life reinsurance business, Transamerica Reinsurance, including the Irish operating entity TIRI. The ratings on TIRI have been lowered to the same level as those on SCOR reflecting the application of our group ratings methodology. It is our expectation that an eligible guarantee of TIRI’s policy obligations, consistent with our guarantee criteria, will be provided by SCOR. The CreditWatch placement reflects our ongoing review of the proposed guarantee.
We will likely resolve the CreditWatch placement before the end of August once we have concluded our review of the potential credit enhancement provided by the proposed guarantee. If the proposed guarantee meets our criteria, the financial strength rating on TIRI will be affirmed at ‘A’, removed from CreditWatch, and assigned a positive outlook, to align it with the ratings on SCOR. At the same time, the counterparty credit ratings will be withdrawn. If the proposed guarantee does not meet our criteria and we classify TIRI as strategically important to SCOR, the ratings on TIRI will be lowered by one notch to ‘A-‘ and assigned a positive outlook, consistent with the positive outlook on its new parent. Based on current information, we consider it unlikely that the ratings on TIRI will be lowered by more than one notch.
Source : S&P Press Release