There was good and bad news for Hannover Re (Bermuda) Ltd. this week. The good news was that it received a double A counterparty credit and financial strength rating from agency Standard & Poor's. The bad news was that it was immediately placed on "credit watch" with negative implications because of concerns that its ultimate parent company may have its credit rating reduced.

"Hannover Re (Bermuda) is a key strategic holding of Hannover Re, given its common customer base with the parent company and Hannover Re's commitment to the property/catastrophe market," said Standard & Poor's credit analyst Damien Magarelli.

"Furthermore, the rating on Hannover Re Bermuda is based on the parent company's equity contribution, corporate strategy, aligned senior management, and common name," Magarelli added.

S&P said Hannover Re (Bermuda)'s rating was supported by "extremely strong capital adequacy and very strong operating performance". "However, a concentration in property/catastrophe risk does cause HRB to have a high-risk profile," the agency said.

On Tuesday, S&P placed its double-'A' counterparty credit and financial strength ratings on Hannover Rueckversicherungs AG (Hannover Re) and related entities on CreditWatch with negative implications.