Moody’s downgrades Peak Re to Baa1; outlook negative

Moody’s Investors Service has downgraded the insurance financial strength rating (IFSR) of Peak Reinsurance Company Ltd. (Peak Re) to Baa1 from A3.

At the same time, Moody’s has changed the outlook to negative from ratings under review.

The downgrade follows Moody’s rating action on 23 August 2022 to downgrade the corporate family rating (CFR) of Peak Re’s majority shareholder, Fosun International Limited (B1 negative), to B1 from Ba3 and change the outlook to negative from ratings under review.

Contagion concern

The rating action on Peak Re mainly considers the increasing contagion risks to Peak Re from Fosun’s weakened credit profile, in particular via reputational damage, which could increasingly strain Peak Re’s business growth and financial flexibility including its capital market access.

The rating agency also considers contagion risk that Fosun might influence Peak Re’s risk appetite.

Moody’s considers governance risks under its environmental, social and governance (ESG) framework a key driver of today’s rating action, given Peak Re’s ownership by Fosun and Fosun’s governance practices.

The negative outlook on Fosun reflects the uncertainties surrounding the company’s execution of asset sales and fundraising against its sizable short-term debt maturity in the next 12 months, and its ongoing challenges in balancing its liquidity needs and maintaining the quality of its investment portfolio.