A.M. Best Co. has downgraded the financial strength rating (FSR) and issuer credit rating (ICR) of Lehman Re Limited for the second time in a week, due to the status of its parent company, Lehman Brothers Holding Inc.

Last week, the rating agency lowered the Hamilton, Bermuda-based reinsurer's FSR to "A-minus" from "A" and ICR to "a-minus" from "a." Now A.M. Best announced it has lowered the FSR again to "B" and the ICR to "bb." The outlook for both ratings remains negative.

The latest rating decision, Oldwick, N.J.-based Best said, is in response to Lehman Brothers' petition for Chapter 11 bankruptcy protection. Best noted that Lehman Re is not in the bankruptcy petition, but said the status of Lehman Brothers "could have a significant adverse impact on Lehman Re."

In last week's rating action, which was also connected to the status of Lehman Brothers but occurred before the bankruptcy petition, Best said, "While A.M. Best believes that Lehman Re's current stand-alone capital position adequately supports its ratings, the negative perception surrounding the parent company may potentially impact Lehman Re's ability to attract and retain business."

Best analyst Richard Baldwin said last week that Lehman Re's ratings have always come with an understanding that the reinsurer would enjoy support from Lehman Brothers, if necessary. Given the condition of Lehman Brothers, however, Mr. Baldwin said it is not now in the same position to raise capital to transfer to Lehman Re.