S&P downgrades Istmo Re

S&P said it downgraded the financial strength and issuer credit ratings on Istmo Compania de Reaseguros, Inc. (Istmo Re) and its core subsidiaries Liffey Reinsurance Co. Ltd. (Liffey Re) and Istmo Mexico Compania de Reaseguros SA de CV (Istmo Re Mexico) to BBB- from BBB.

The agency also said it lowered the national scale ratings on Istmo Re Mexico to mxAA from mxAA+.

The outlook is negative.

S&P also said it revised downward the ratings on Istmo Re to BBB- from BBB because it revised the assessment of the company's financial flexibility to weak from less than adequate.

The company had higher debt and lower fixed-charge coverage ratio in 2015, both of which were contrary to expectations, the agency said.

The company also faces governance deficiencies that have resulted in strategic decisions inconsistent with Istmo Re's current financial resources, S&P said.

This may expose the company to a severe liquidity stress, the agency added.

The ratings also continue to reflect Istmo Re’s adequate competitive position given a track record of disciplined underwriting, diverse income sources and strong capitalization, S&P said.

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