Agency cuts AMI Insurance's rating

AM Best Co has downgraded the rating of New Zealand fire and general insurer AMI Insurance Ltd due to losses from the Canterbury earthquake.

The financial strength rating has moved to A minus from A plus and the issuer credit rating to A minus from AA minus.

Both ratings have been placed under review with negative implications.

The A minus financial strength rating is called excellent, while the A plus rating is superior.

AM Best said it understood that capital raising initiatives were being pursued by AMI's management and it had the ratings under review with negative implications while discussions continued with management regarding back-up capital plans.

The downgrades reflected AM Best's view of the negative impact on AMI's capitalisation, due to the latest loss development from the Canterbury earthquake in February 2011.

AM Best was concerned with AMI's risk management in relation to its aggregate catastrophe exposures.

AMI is the largest wholly New Zealand-owned fire and general insurance company.

It is a mutual, meaning it is owned by its customers.

- NZPA