Standard & Poor’s outlook revision for Bermuda does not affect the Island’s insurers and reinsurers, the firm has confirmed.

The rating agency recently placed Bermuda’s sovereign credit rating from stable to negative, however S&P’s credit and financial strength ratings on Bermuda-based insurers and reinsurers remains unchanged.

Seven (re)insurers in Bermuda are rated ‘AA’ by S&P’s.

The firm said that in limited circumstances it rates reinsurers higher than the local currency sovereign credit rating according to its criteria.

As a financial centre, Bermuda is rated (AA-/Negative/A-1+) by S&P’s.

“(Re)insurers that we may rate above the sovereign write most of their business with policyholders outside the financial centre, hold most of their investments in a form other than local sovereign debt of that financial centre, and hold most of their deposits and invested assets in financial institutions domiciled outside that financial centre,” said Standard & Poor’s credit analyst Taoufik Gharib.

The agency has produced a special report titled “The Recent Outlook Revision On Bermuda Does Not Affect Bermudian (Re)Insurers.”

S&P’s stated that Bermudian (re)insurers rated higher than the sovereign are typically part of global (re)insurance groups that conduct the majority of their business under a Bermuda license.

“We believe such (re)insurers’ financial strength is independent of the financial centre’s sovereign risk,” said Standard & Poor’s in a statement.

“Bermudian (re)insurers showed their financial resilience in 2012, amid catastrophe losses, decreasing investment income, increasingly competitive pricing, a tepid economic recovery in the US, and the eurozone crisis.

“They generated strong results with a combined ratio of 91.7 percent and a return on average equity of 11.2 percent, compared with a weaker 104.1 percent and one percent, respectively, in 2011.”