RAM Holdings Ltd. (Nasdaq:RAMR) responded today to Moody’s
Investors Service (Moody’s) ratings action.
Moody's downgraded to A3, from Aa3, 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 Ba1 and the rating of Blue Water Trust, a related
contingent capital facility, to Baa3. Moody’s
stated that its rating action reflects Moody's views on RAM Re's overall
credit profile in the current environment, including increased expected
and stress loss projections among its mortgage-related risk exposures
relative to previous estimates and significantly constrained new
business prospects. Moody’s also stated that
it will continue to review RAM Re’s rating for
further possible downgrade.
“While we are disappointed by Moody’s
action, we believe we reduced the overall risk profile of our insured
portfolio with the previously announced commutation with XL Financial
Assurance,” said Vernon M. Endo, Chief
Executive Officer. “We will be working with
our customers to confirm the ongoing value of our reinsurance. In that
regard, we also intend to work closely with Moody’s
on establishing the reinsurance credit we provide to each of the
primaries, given the recent downgrades. This credit for reinsurance
should be determined by the relative ratings of the primary and the
reinsurer, and accordingly, we believe there should be no reduction in
credit where the ratings gap (formerly Aaa to Aa3) of three notches is
maintained or reduced.”
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.
The potential consequences of a Moody’s
downgrade of RAM Re below Aa3 are described in RAM’s
Current Report on Form 8-K filed on February 8, 2008.
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. Among the risks and
uncertainties are (i) any further Moody’s
ratings assessments of RAM and its customers, (ii) any further Standard
& Poor’s ratings assessments of RAM and
its customers, (iii) RAM’s ability to
successfully address any rating agency capital requirements within the
applicable timeframes, (iv) a further downgrade in financial strength
ratings of RAM Re by S&P or Moody's, (v) higher risk of loss due to
deterioration in the credit markets resulting from poor performance of
residential mortgage loans, (vi) new competitors entering the market for
financial guaranty reinsurance, (vii) changes in general economic
conditions, including inflation, foreign currency exchange rates,
interest rates and other factors; (viii) decreased demand for financial
guaranty insurance or our reinsurance products; (ix) the loss of
significant customers with whom we have a concentration of our
reinsurance in force; (x) legislative and regulatory developments; (xi)
changes in regulation or tax laws applicable to us or our customers;
(xii) more severe losses or more frequent losses associated with our
products; (xiii) losses on credit derivatives; (xiv) changes in our
accounting policies and procedures that impact the Company's reported
financial results; and (xv) other risks and uncertainties that have not
been identified at this time. The Company undertakes no obligation to
revise or update any forward-looking statement to reflect changes in
conditions, events, or expectations, except as required by law.
About RAM
RAM Holdings Ltd. is a Bermuda-based holding company. Its operating
subsidiary RAM Reinsurance Company Ltd. provides financial guaranty
reinsurance for U.S. and international public finance and structured
finance transactions. More information can be found at www.ramre.com.
RAM Holdings Ltd., Hamilton
Victoria Guest, 441-298-2116
vguest@ramre.bm
