(The following statement was released by the rating agency)
June 05 -
-- We have lowered our 'BB+' financial strength and issuer credit ratings on New Zealand-based CBL Insurance Ltd. (CBL) to 'BB-'. The outlook is negative.
-- CBL's total adjusted capital has been materially eroded by goodwill from its acquisition of European Insurance Services Ltd. (EISL; not rated), and increased deferred acquisition costs.
-- Although the company reported strong underlying business growth in 2011, the doubling of its total gross exposure has not been supported by adequate capital growth.
-- The outlook is negative, reflecting our expectations that it will take some time for CBL to build up sufficient capital through retained earnings. We believe that there is a reasonable probability that the company will not be able to achieve its forecast earnings because of its increased exposure to a weakening European economy.
On June 5, 2012, Standard & Poor's Ratings Services lowered its financial strength and issuer credit ratings to 'BB-' from 'BB+', on New Zealand-based CBL Insurance Ltd. (CBL). The outlook is negative.