A group of startup reinsurers, formed in the wake of the reinsurance sector's record hurricane losses this year and dubbed the "Class of 2005," may have difficulties achieving "A" ratings because of several factors, according to Fitch Ratings.
The 10-12 reinsurers, formed in large part to capitalize on anticipated favorable market conditions, resemble companies formed in the wake of large sector-wide losses caused by 1992's Hurricane Andrew and Sept. 11, 2001, Fitch said.
While Fitch said its rating methodology does not impose a ceiling on startup reinsurers' ratings, the agency noted a few factors would make it difficult for the majority of the Class of 2005 to achieve insurer financial strength (IFS) ratings as high as the "A" range but would not preclude "secure" ratings in the "BBB" range.
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