MUNICH RE HIT BY DOWNGRADE

Rating agency Fitch has downgraded the financial strength rating of German reinsurer Munich Re from double A plus to double A. It said that, although underlying p/c reinsurance results had been good in 2003, the profitability of the group’s primary operations, particularly in life, had been weak “largely due to adverse capital developments”. On the reinsurance side, Fitch recognised Munich Re’s “very strong capital position”, following its recent 4bn euro rights issue, but felt that “leveraging the group’s market position to significantly outperform the market over the underwriting cycle may still remain challenging”. Last week Munich Re warned that it would probably post its first full-year loss since 1906 after third-quarter figures were worse than analysts had expected.