The Alea Group Holdings Ltd. board of directors said today it is currently exploring strategic alternatives in the wake of and action by Standard & Poor's lowering its rating to "triple-B-plus" from "A-minus."
In a statement issued this morning, the Bermuda-based group said alternatives being considered include sale of the group, and there can be no assurance that any transaction will be concluded.
"Simultaneously, the group is developing a strategic approach to the repositioning of its business to reflect the lowered rating environment," the statement said.
In London, S&P issued the downgrade notice, along with a negative outlook on the group.
"The downgrades follow last week's announcement of Alea's results for the first half of 2005, which did not meet expectations of Standard & Poor's or Alea's management, and continued the disappointing operating performance trend of recent years," said Simon Marshall, S&P credit analyst.
S&P said that while the trend cast doubt on the group's ability to meet its operating plans, the current management team had implemented improvements to the operations.
"The negative outlook reflects the challenge of retaining a sufficient flow of good-quality business going forward," Mr. Marshall said.
A material decline in the quality or volume of the business would trigger a further downgrade, while the status quo would maintain the rating, he added.
Late last month, Alea said its gross written premium declined 14 percent in the six months ending on June 30 to $855.4 million, while profit before taxes for the same period was down 47 percent to $25.9 million.
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