The sale of Bermuda reinsurer Commercial Risk Partners by its parent company does not appear “imminent” and negotiations have become protracted, according to ratings agency A.M. Best.

In January this year French Reinsurer SCOR said it was to sell the company after its Bermuda subsidiary continued to cut into its profits but said it expected to complete a deal by June 30. It did not name the interested parties when it made the announcement.

Yesterday the ratings agency A.M. Best downgraded Commercial Risk Reinsurance Company and its US subsidiary, Commercial Risk Re-Insurance Company (Vermont), which both come under the holding company Commercial Risk Partners.

Apart from the downgrade from B++ (very good) to B+ (very good) it also assigned a negative outlook to the Bermuda company.

“Both ratings have been removed from under review and assigned a negative outlook,” said the release from A.M. Best.

Commercial Risk posted large operating losses of nearly $100 million in 2002 and its parent company, SCOR said in August this year its business had fallen from 2.5 billion euros ($2.72 billion) in gross premiums written in the first six months of 2002 to 2 billion euros ($2.17 billion) during the same period this year and this was mainly due to Commercial Risk.

SCOR chairman Denis Kessler reportedly told company directors this year that Commercial Risk results had clouded what could have been a bright period of performance for SCOR.

Best said in their release: “These rating actions reflect A.M. Best's view of the companies' consolidated risk-adjusted capitalisation. They also consider large operating losses in 2002 and continued losses in the first half of 2003 on a consolidated basis, as well as inter-company balances with SCOR, whose financial strength rating was recently downgraded to B++ (Very Good).”

The release went on to say the negative outlook reflected the uncertainty arising from the run-off of liabilities and “commutations of the companies' business following the adverse development of reserves registered in 2002”.

It said that in January of 2003, SCOR announced that it was placing the companies in run-off and seeking to sell them during the course of 2003.

“However, a sale does not appear imminent as negotiations have become protracted,” it said. But it added that the agency recognised the “significant actions” taken by SCOR to minimise the companies' reserving risks which included a large commutation which has helped reduce the companies' consolidated risk capital requirements by reducing loss reserves by nearly 20 percent.

Earlier this year SCOR said it was winding down the credit derivatives portfolio of Commercial Risk and the company stopped underwriting in January after its parent company said its business was “non-strategic”.