Tornados Cut Through Mariah’s Rating

Chris Westfall
Chris Westfall

Mariah Re Ltd., a catastrophe bond covering American Family Mutual Insurance from severe thunderstorms, had its rating cut by Standard & Poor’s Monday following additional reported losses following U.S. tornados.

S&P lowered its rating on Mariah Re series 2010-1 notes to ‘CCC+’ from ‘B’ and revised the catastrophe bond status to “developing” from “negative.”

According to the S&P statement, Property Claims Services‘ preliminary estimate of total losses covered by Mariah through the end of May is $453 million and modeled losses were expected to equal $302 million.

Although the bond was not triggered since losses did not meet the attachment point, the rating agency downgraded the notes to indicate the increase likelihood of a loss. S&P said that if additional qualifying events do not occur over the next two months and “loss estimates on existing covered events do not increase by a material amount” the bond will be upgraded.

Mariah Re was placed on CreditWatch last month after severe storms in the U.S. Midwest caused an estimated $15 billion in insured looses, according to AIR Worldwide.