RAM Holdings Ltd. (Nasdaq:RAMR) responded today to Moody’s Investors
Service (Moody’s) ratings action. Moody's downgraded to Baa3, from A3,
the insurance financial strength rating of RAM Reinsurance Company Ltd.
(RAM Re). In the same rating action, Moody's also downgraded the rating
of the preference shares of RAM Holdings Ltd. to B2 and the rating of
Blue Water Trust, a related contingent capital facility, to Ba3. Moody’s
stated that the downgrade results from three primary factors. First is
Moody’s expectation of greater losses on mortgage related exposures,
reflecting continued adverse delinquency trends. Second is Moody’s view
of diminished business prospects as reflected by low underwriting
volume. Third is the Company’s impaired financial flexibility.
“While we are disappointed with this rating action, we believe that our
commutation efforts have improved our insured portfolio,” said Vernon M.
Endo, Chief Executive Officer. “In particular, we note that Moody’s does
not project losses with respect to the ABS CDOs remaining in our
portfolio after the commutations. Our ‘developing outlook’ for the first
time acknowledges the potential for improvement, via further
commutations among other possible positive developments, in our insured
portfolio. We note that Moody’s still has not established a matrix for
reinsurance credit that would allow us to determine the ongoing value of
our reinsurance to our ceding companies.”
RAM continues to pursue a number of alternatives to improve its capital
position and the risk profile of its insured portfolio including
commutations of risks. Due to current market conditions, RAM does not
expect to raise new capital at the present time.
RAM's strategy remains subject to change, and there can be no assurance
that RAM will be successful in maintaining its current treaties in
effect, writing new business, improving its capital position or
improving or maintaining its current rating from Moody’s.
Forward-Looking Statements
This release contains statements that may be considered "forward-looking
statements." These statements are based on current expectations and the
current views of the economic and operating environment and are not
guarantees of future performance. A number of risks and uncertainties,
including economic competitive conditions, could cause actual results to
differ materially from those projected in forward-looking statements.
Our actual results could differ materially from those expressed or
implied in the forward-looking statements.
